This Compensation Discussion and Analysis ("CD&A") provides important information about our executive compensation philosophy and programs for fiscal 2020.2021. In addition, this CD&A describes compensation decisions made by our Human Resources and Compensation Committee of the Board (sometimes referred to in this CD&A as the "Committee"), which is responsible for overseeing the compensation programs for our executive officers, including the officers named in the executive compensation tables in this Proxy Statement (collectively, the "named executive officers").
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COMPENSATION DISCUSSION AND ANALYSIS |
(1) Non-GAAP financial measure; see the Appendix to Proxy Statement for a reconciliation of such measure against the most directly comparable GAAP financial measure.
(2) Excludes the impact from sale of receivables ($185 million) under the Master Accounts Receivable Purchase Agreement.
We maintained our commitmentstand committed to profitable growth and long-term value creation. Full year revenue of $6.379$7.056 billion represents 37%includes growth of year-over-year growth. The revenue11% driven by the Unisys Federal acquisition and 4% excluding COVID-19 impact. This is the highest internal growth was driven primarily by our strategic acquisitionin the history of Engility.the company.
Full year adjusted EBITDA increased to 8.4%8.9% of revenues, compared to 7.6%8.4% in the prior fiscal year. The increase was driven by the acquisition of Engility, the realization of cost synergies resulting from the acquisition,Unisys Federal and strong operational execution.execution across the portfolio.
Full year operating cash flow was $458 million.$570 million after excluding sale of receivables. Cash flow generation is centralkey to our shareholder value proposition and allowed us to deliver $87 million in annual dividend payments and to repurchase $177$19 million in shares of our common stock during fiscal 2020.
2021.
Total Shareholder Return ("TSR")
as of January 31, 202029, 2021
TSR for fiscal year 20202021 was 32%11%, outperforming thebelow a broader market index andbut considerably above a comparable technology index fund. However, overOver a prior three-year period, the company's TSR has significantly laggedbeen generally comparable to the same broader market index and was modestly belowsignificantly above the comparable technology index.
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31Science Applications International Corporation |
2021 Proxy Statement | saic.com28 |
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COMPENSATION DISCUSSION AND ANALYSIS |
Summary of Compensation Philosophy
The company maintains a strong “pay-for-performance” compensation philosophy aimed at attracting and retaining high quality executive talent and rewarding our executive officers primarily through variable compensation. Fixed compensation (i.e., base salary) is set at appropriate levels to avoid competitive disadvantage and comprises the smallest portion of overall compensation. We believe that this philosophy serves to both encourage and recognize performance excellence and helps drive stockholder value while facilitating a sustainable fixed-cost structure.
The charts below depict approximate percentages for each element of target total direct compensation and demonstrate how compensation is significantly weighted towards variable compensation (short-term cash incentives, performance shares, RSUs and stock options).(1) The details of all executive officer compensation are provided in the "Executive Compensation" section of this Proxy Statement. (1) Because Mr. Natarajan received no incentive compensation in fiscal 2021, his compensation is not included in the elements of Other Named Executive Officers' compensation.
Total direct compensation for named executive officers is targeted at approximately median levels of compensation of comparable positions in publicly traded companies of our size and in our industry. However, consistent with our pay-for-performance philosophy, actual earned compensation varies above or below the median level based on the degree to which specific performance goals are achieved, changes in our stock value over time and the individual performance of each named executive officer.
As indicated above, base salary represents a significantly smaller portion of overall compensation than variable compensation. The allocation of a meaningful portion of overall compensation to annual cash incentive awards reflects our philosophy that a meaningful portion of total compensation should reflect the actual achievement of predetermined goals. The largest portion of overall compensation for our executive officers is allocated to long-term incentives, supporting long-term value creation and aligning the interests of our executive officers with those of our stockholders. Performance share awards ("PSAs") to our executive officers in fiscal 20202021 are directly related to the achievement of EBITDA and annual operating cash flow over a three-year period commencing in fiscal 2020.2021. A combination of PSAs, stock options and time-based RSUs provide an appropriate balance of medium-term and long-term incentives.
By aligning significant portions of named executive officers’ compensation with profitable growth and operating cash flow, a substantial portion of total compensation for our named executive officers is directly linked to long-term sustainable stockholder returns.
Based on performance delivered by the company in fiscal 2020,2021, the calculated payout of the short-term financial portion of annual incentives was 98.2%98.7% of target, as discussed in greater detail on page 38.34. For fiscal 2020,2021, the Committee determined to apply a leadership score ranging between 1.0 and 1.2 to the calculated cash incentive awards of the Chief Executive Officer and each other named executive officer, based upon an assessment of each executive's performance in leading the business and leading employees. PSAs granted for the fiscal 20182019 through 20202021 performance period were earned at 77.9%92.2% of target ending fiscal 2020.2021.
Looking to fiscal 2022, we will maintain the short-term and long-term performance metrics used the past three fiscal years. However, we will refine our incentive plan design by introducing components that emphasize organic growth and performance relative to our peer group. Specific enhancements will include adjusting short-term incentive metrics’ performance scales to consider expected peer performance, establishing equal weightings for our short term incentive metrics and Performance Share
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| | Science Applications International Corporation |
2020 Proxy Statement29 | 32saic.com |
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COMPENSATION DISCUSSION AND ANALYSIS |
Plan metrics, and introducing a relative (to our peer group) Total Shareholder Return (rTSR) modifier to determine Performance Share Plan payout.
Governance of Our Compensation Programs
Our compensation programs incorporate best practices regarding corporate governance, risk mitigation and alignment of executive officers’ interests with stockholders’ interests. The following are key features of our compensation practices:
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At SAIC, we ... |
ü Believe in pay for performance—simply put, we reward those who perform. ü Conduct an annual review by the Committee to establish a group of comparable companies to be used in compensation decisions. ü Review and consider feedback provided by our stockholders related to executive compensation matters. ü Mitigate against imprudent risk-taking through balancing features in the design of our compensation programs. ü Subject cash and equity-based incentive compensation to a “clawback” policy if there is a material restatement of our financial results for any reason or if the employee was involved in misconduct. ü Require significant stock ownership under our stock ownership guidelines. ü Use an independent compensation consultant who reports directly to the Committee. ü Provide “double-trigger” provisions for certain change in control benefits. |
At SAIC, we do not ... |
× Permit cash buyout or re-pricing of underwater stock options. × Guarantee any bonus payouts to executive officers. × Provide employment agreements for executive officers. × Provide golden parachute excise tax gross-ups on change in control benefits. × Permit hedging or pledging of company stock or purchasing company stock on margin by our executive officers. × Offer pension benefits to our executive officers or other employees. × Provide excessive perquisites for executive officers. |
Results of 20192020 Stockholder Advisory Vote
Based on our stockholder advisory vote at our 20192020 annual meeting of stockholders, commonly referred to as a "Say-on-Pay" vote, our stockholders approved the compensation of our named executive officers, with approximately 96%97% of stockholder votes cast in favor of our 20192020 Say-on-Pay resolution. The Committee, which is composed exclusively of independent directors, views this level of support for our executive compensation programs as indicative of broad stockholder agreement with the pay for performance philosophy on which our executive compensation programs are premised. Accordingly, the Committee determined not to make any significant changes to our programs as a result of the "Say-on-Pay" vote at our 20192020 annual stockholders meeting.meeting of stockholders.
We welcome feedback from stockholders regarding our executive compensation programs, which are described in more detail below. Stockholders desiring to communicate with the Board or the Human Resources and Compensation Committee may do so as described under "Communication with the Board of Directors" in this Proxy Statement. The Committee will continue to take into account stockholder votes on Say-on-Pay resolutions when evaluating our compensation philosophy and making changes to our compensation programs and practices. See “Proposal 2—Advisory (Non-Binding) Vote on Executive Compensation” and “Proposal 3—Advisory (Non-Binding) Vote on Frequency of Vote on Executive Compensation” in this Proxy Statement for additional information on our resolutions for 20202021 Say-on-Pay and the frequency of future Say-on-Pay resolutions.
resolution.
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33Science Applications International Corporation |
2021 Proxy Statement | saic.com30 |
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COMPENSATION DISCUSSION AND ANALYSIS |
Principal Elements and Objectives of Our Compensation Programs
Under the direction of the Committee, we provide the following principal elements of compensation to our named executive officers:
Base Salary
We provide a fixed base salarysalaries to our named executive officers based on their level of responsibility, expertise, skills, knowledge and experience and on competitive peer company and other applicable market data. We generally target our named executive officers’ base salaries at the median of the competitive market. Consistent with our philosophy of tying pay to performance, base salary represents a significantly smaller portion of overall compensation than variable compensation.
Variable Incentive CompensationBase Salary
We use a combination of cash and equity incentive awards to foster and reward performance in key areas over short-term and long-term timeframes. Our annual cash incentive awards are based upon performance against predetermined goals for the fiscal year to encourage and reward contributions to our annual financial, operating and strategic objectives. We provide equity incentive awardsfixed base salaries to our named executive officers to motivate them to stay with usbased on their level of responsibility, expertise, skills, knowledge and build long-term stockholder value through their future performance. Stock options, in particular, aid in employee retentionexperience and motivateon competitive peer company and other applicable market data. We generally target our named executive officers to build stockholder value because they may realize value only if our stock appreciates overofficers’ base salaries at the seven-year option term. The Committee generally does not consider an executive officer’s current stock or option holdings in making additional equity awards.
The following chart summarizes the relevant performance measures and time frames used for the variable pay elements in our program for fiscal 2020:
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(1) | RSUs awarded prior to fiscal 2020 vest over a four-year period in 25% installments at each anniversary of the grant date. RSUs awarded in fiscal 2020 vest over a three-year period in 33% installments at each anniversary of the grant date. |
Other Benefits
We also provide our named executive officers with benefits generally available to other employees, as part of a market competitive total compensation opportunity, such as participation in our health and welfare benefits, deferred compensation and retirement programs. Our named executive officers are also entitled to certain executive severance benefits if their employment is ended due to an organizational restructure, shift in business priorities, change in leadership skill requirements or certain other terminations of employment. Our executive health benefit plan for certain executive officers, including named executive officers, provides a comprehensive medical assessment and personalized preventive strategies to maintain and improve personal health.
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2020 Proxy Statement | 34 |
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COMPENSATION DISCUSSION AND ANALYSIS |
Certain Adjustments to Executive Compensation for Fiscal 2020
In connection with Mr. Moraco’s retirement and Ms. Keene’s appointment as Chief Executive Officer and a membermedian of the Board, eachcompetitive market. Consistent with our philosophy of which became effective as of July 31, 2019 (the “Effective Date”), the Board approved certain adjustmentstying pay to each of Mr. Moraco’s and Ms. Keene’s executive compensation for fiscal 2020.
Prior to his retirement, Mr. Moraco provided certain transition services to the company through the Effective Date. In exchange for such services, among other things, (i) Mr. Moraco’sperformance, base salary increased to $1,060,000, (ii) Mr. Moraco receivedrepresents a short-term cash bonussignificantly smaller portion of $700,000, (iii) the company paid certain of Mr. Moraco’s premium costs relating to the continuation of his group health insurance coverage through the eighteen (18) month period following the Effective Date, and (iv) Mr. Moraco achieved special retirement status for the continued vesting of certain outstanding equity awards after the Effective Date.
In connection with her appointment, Ms. Keene’s annual compensation for fiscal 2020 was adjusted as follows: (i) an annual base salary of $1,000,000 effective as of April 1, 2019, (ii) a short-term incentive cash bonus target equal to 125% of her base salary, and (iii) $3,800,000 of long-term incentive awards in the form of performance shares, stock options and RSUs under the company's executive compensation plan. As an executive officer of the company, Ms. Keene also continued to participate in our Deferred Compensation Plan. As an employee director, Ms. Keene did not serve on any reportable risk committees of the Board and did not receive any additional compensation for her service as a member of the Board.
Committee Process for Determining Direct Compensation
At the beginning of each fiscal year, the Committee reviews and approves the following elements of direct compensation to be provided to our named executive officers:
base salary for the upcoming year;
payout range for the cash incentive awards that may be earned for the upcoming year and the performance goals and criteria upon which the amount of the awards will be determined;
mix and amount of equity incentive awards to be granted to our executive officers; and
payout range for PSAs that may be earned for the performance period beginning in that fiscal year and the length of the performance period, goals and criteria upon which the amount of the awards for the relevant performance period will be determined.
In determining the amounts of direct compensation to be awarded to our named executive officers, the Committee considers the company’s overall performance and competitive market data for our compensation peer group.
Company performance is the primary factor in determining variable compensation. The amount of any cash or performance-based equity incentive awards to be paid upon completion of the applicable performance period is determined based upon our achievement of short- and long-term financial goals set at the beginning of the fiscal year. The final cash incentive award payout also reflects a leadership component. The Committee retains the ability to use negative discretion to reduce payouts when appropriate.
Individual performance is a factor in setting base salaries. In determining base salaries for our named executive officers, the Committee reviews a performance assessment for each of our executive officers, as well as compensation recommendations provided by the Chief Executive Officer and the Chief Human Resources Officer. The Committee also considers market data, analysis and recommendations regarding executive officer compensation provided by Frederic W. Cook & Co. Inc. ("FW Cook"), its independent compensation consultant. The named executive officers do not propose their own compensation.
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COMPENSATION DISCUSSION AND ANALYSIS |
The Committee assesses our Chief Executive Officer's performance. In determining compensation for our Chief Executive Officer, the Committee meets in executive session and evaluates her performance based on her achievement of performance objectives that are established at the beginning of the fiscal year. Formal input is received from the independent directors and the executive leadership team. The Committee also considers the Chief Executive Officer’s leadership contributions towards the company’s performance, including financial results, development and achievement of strategic objectives, progress in building capability among the executive leadership team, development of a succession plan for executive leadership and corporate governance leadership, as well as market data and analysis and recommendations provided by the Committee’s independent compensation consultant. The Committee determines the Chief Executive Officer’s compensation and then reviews her evaluation and compensation with the Board’s independent directors. The Chief Executive Officer does not propose her own compensation and is not present for discussions of her performance and compensation. The Independent Chair of the Board and the Chair of the Committee then present the Committee’s evaluation and compensation determination to the Chief Executive Officer.
The Committee reviews our compensation peer group annually. The Committee compares the amount of direct compensation we provide to our named executive officers to that provided by companies that we believe have similar revenues and industry focus to ours, as well as companies with whom we compete for executive talent with similar roles and responsibilities. To complete this effort, the Committee establishes a peer comparator group for each fiscal year and benchmarks each element of direct compensation (including salary, cash and equity incentives) to be provided to our named executive officers against that provided by other publicly traded engineering, information technology, consulting and defense companies, which we refer to as our “compensation peer group.” The compensation peer group used for determining fiscal 2020 target compensation consisted of the 15 companies listed below. As a result of mergers and acquisitions within the industry, six companies that were part of our fiscal 2019 compensation peer group were removed, and five companies were added to our fiscal 2020 compensation peer group.
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Booz Allen Hamilton | L-3 Communications Holdings, Inc.(1)
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CACI International Inc | Leidos, Inc. |
CGI Group, Inc. | ManTech International Corporation |
Collins Aerospace | MAXIMUS, Inc. |
Harris Corporation(1)
| Parsons Corporation |
Huntington Ingalls Industries | Perspecta |
Jacobs Engineering Group, Inc. | Unisys Corporation |
KBR, Inc. | |
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(1) | Harris Corporation and L-3 Communications Holdings, Inc. merged to form L3Harris Technologies, Inc., as of June 29, 2019. |
The compensation peer group is structured so that no company within the group has annual revenues greater than three times or less than approximately one-third of our estimated revenues for the fiscal year in which the peer group is reviewed. For comparison purposes, for fiscal 2020, our estimated annual revenues were at approximately the 48th percentile of the revenues of the compensation peer group. In addition to the compensation peer group, data from three nationally-recognized, broad-based third-party surveys is compiled and provided for the Committee’s consideration regarding compensation that other comparably-sized companies provide to their chief executive officer, chief financial officer and other members of senior management. The identity of the individual companies comprising the survey data is not disclosed to the Committee in its evaluation process. The Committee considers this survey data and analysis along with the compensation peer group data when evaluating appropriate levels of direct compensation. To be competitive in the market for our executive-level talent, we generally target overall compensation for our named executive officers at approximately the market median, although the actual cash incentive awards paid and performance shares earned vary, consistent with our pay-for-performance philosophy, based on operating performance and may therefore generate realized compensation that is higher or lower than the market median.variable compensation.
Components of Fiscal 2020 Compensation Programs
Base Salary
We provide fixed base salaries to our named executive officers based on their level of responsibility, expertise, skills, knowledge and experience and on competitive peer company and other applicable market data. We generally target our named executive officers’ base salaries at the median of the competitive market. Consistent with our philosophy of tying pay to performance, base salary represents a significantly smaller portion of overall compensation than variable compensation.
Variable Incentive Compensation
We use a combination of cash and equity incentive awards to foster and reward performance in key areas over short-term and long-term timeframes. Our annual cash incentive awards are based upon performance against predetermined goals for the fiscal year to encourage and reward contributions to our annual financial, operating and strategic objectives. We provide equity incentive awards to our named executive officers to motivate them to stay with us and build long-term stockholder value through their future performance.
The following chart summarizes the relevant performance measures and time frames used for the variable pay elements in our program for fiscal 2021:
(1) RSUs awarded prior to fiscal 2020 vest over a four-year period in 25% installments at each anniversary of the grant date. RSUs awarded in fiscals 2020 and 2021 vest over a three-year period in 33% installments at each anniversary of the grant date.
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COMPENSATION DISCUSSION AND ANALYSIS |
Committee Process for Determining Direct Compensation
At the beginning of each fiscal year, the Committee reviews and approves the following elements of direct compensation to be provided to each of our named executive officers:
• base salary for the upcoming year;
• payout range for the annual cash incentive awards that may be earned for the upcoming year and the performance goals and criteria upon which the amount of the awards will be determined;
• mix and amount of equity incentive awards to be granted to our executive officers; and
• payout range for PSAs that may be earned for the performance period beginning in that fiscal year and the length of the performance period, goals and criteria upon which the amount of the awards for the relevant performance period will be determined.
In determining the amounts of direct compensation to be awarded to our named executive officers, the Committee considers the company’s overall performance and competitive market data for our compensation peer group.
Company performance is the primary factor in determining variable compensation. The amount of any cash or performance-based equity incentive awards to be paid upon completion of the applicable performance period is determined based upon our achievement of short- and long-term financial goals set at the beginning of the fiscal year or performance period, as the case may be. The final cash incentive award payout also reflects an individual leadership component. In fiscal 2022, the individual leadership component will be based, in part, on the achievement of specific diversity goals for representation of women and minorities in leadership roles. The Committee retains the ability to use negative discretion to reduce payouts when appropriate.
Individual performance is a factor in setting base salaries. In determining base salaries for our named executive officers, the Committee reviews a performance assessment for each of our executive officers, as well as compensation recommendations provided by the Chief Executive Officer and the Chief Human Resources Officer. The Committee also considers market data, analysis and recommendations regarding executive officer compensation provided by Frederic W. Cook & Co. Inc. ("FW Cook"), its independent compensation consultant. The named executive officers do not propose their own compensation.
The Committee assesses our Chief Executive Officer's performance. In determining compensation for our Chief Executive Officer, the Committee meets in executive session and evaluates her performance based on her achievement of performance objectives that are established at the beginning of the fiscal year. Formal input is received from the independent directors and the executive leadership team. The Committee also considers the Chief Executive Officer’s leadership contributions towards the company’s performance, including financial results, development and achievement of strategic objectives, progress in building capability among the executive leadership team, development of a succession plan for executive leadership and corporate governance leadership, as well as market data and analysis and recommendations provided by the Committee’s independent compensation consultant. The Committee determines the Chief Executive Officer’s compensation and then reviews her evaluation and compensation with the Board’s independent directors. The Chief Executive Officer does not propose her own compensation and is not present for discussions of her performance and compensation. The Independent Chair of the Board and the Chair of the Committee then present the Committee’s evaluation and compensation determination to the Chief Executive Officer.
The Committee reviews our compensation peer group annually. The Committee compares the amount of direct compensation we provide to our named executive officers to that provided by companies that we believe have similar revenues and industry focus to ours, as well as companies with whom we compete for executive talent with similar roles and responsibilities. To complete this effort, the Committee establishes a peer comparator group for each fiscal year and benchmarks each element of direct compensation (including salary, cash and equity incentives) to be provided to our named executive officers against that provided by other publicly traded engineering, information technology, consulting and defense companies, which we refer to as our “compensation peer group.” The compensation peer group used for determining fiscal 2021 target compensation consisted of the 15 companies listed below.
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Science Applications International Corporation |
2021 Proxy Statement | 32 |
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COMPENSATION DISCUSSION AND ANALYSIS |
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Booz Allen Hamilton | L-3 Communications Holdings, Inc.(1) |
CACI International Inc | Leidos, Inc. |
CGI Group, Inc. | ManTech International Corporation |
Collins Aerospace | MAXIMUS, Inc. |
Harris Corporation(1) | Parsons Corporation |
Huntington Ingalls Industries | Perspecta |
Jacobs Engineering Group, Inc. | Unisys Corporation |
KBR, Inc. | |
(1) Harris Corporation and L-3 Communications Holdings, Inc., merged to form L3Harris
Technologies, Inc., as of June 29, 2019.
The compensation peer group is structured so that no company within the group has annual revenues greater than three times or less than approximately one-third of our estimated revenues for the fiscal year in which the peer group is reviewed. For comparison purposes, for fiscal 2021, our estimated annual revenues were at approximately the 48th percentile of the revenues of the compensation peer group. In addition to the compensation peer group, data from three nationally-recognized, broad-based third-party surveys is compiled and provided for the Committee’s consideration regarding compensation that other comparably-sized companies provide to their chief executive officer, chief financial officer and other members of senior management. The identity of the individual companies comprising the survey data is not disclosed to the Committee in its evaluation process. The Committee considers this survey data and analysis along with the compensation peer group data when evaluating appropriate levels of direct compensation. To be competitive in the market for our executive-level talent, we generally target overall compensation for our named executive officers at approximately the market median, although the actual cash incentive awards paid and performance shares earned vary, consistent with our pay-for-performance philosophy, based on operating performance and may therefore generate realized compensation that is higher or lower than the market median.
Components of Fiscal 2021 Compensation Programs
Base Salary
In reviewing and approving the fiscal 20202021 base salaries for our named executive officers, the Committee considered its independent compensation consultant’s analysis of pay levels among the compensation peer group and survey data, which indicated that base salaries for our named executive officers were generally competitive relative to the peer group median and to survey data median for all executive officers. Actual individual base salary amounts also reflect the Committee’s judgment with respect to each named executive officer’s responsibility, performance, experience and other factors, the individual’s historical
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| | Science Applications International Corporation |
2020 Proxy Statement | 36 |
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COMPENSATION DISCUSSION AND ANALYSIS |
compensation and any retention concerns. The Committee reviews named executive officers’ base salaries annually or at the time of a promotion or a substantial change in responsibilities based on the above-described criteria. For example, the Committee determined that significant increases to the scope and revenue of the lines of business that Mr. Genter and Mr. LaRouche oversee warranted commensurate base salary increases.
In fiscal 2020,2021, base salaries for the named executive officers were increased to align with the peer group median levels and to maintain competitiveness of our compensation program and, in the case of Ms. Keene, to reflect increases in roles and responsibilities.program. The fiscal 20202021 base salaries and the percentage increases from fiscal 20192020 base salaries for our named executive officers are set forth below:
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Name | Fiscal 2021 Base Salary | Percentage Increase from Fiscal 2020 Base Salary |
Nazzic S. Keene | $1,075,000 | 7.5 | % |
Prabu Natarajan(1) | $600,000 | — | |
Charles A. Mathis | $575,000 | 4.5 | % |
Robert S. Genter | $600,000 | 33.3 | % |
Steven G. Mahon | $600,000 | 4.3 | % |
Michael W. LaRouche | $475,000 | 18.8 | % |
(1) Mr. Natarajan joined the Company in fiscal 2021.
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Name | Fiscal 2020 Base Salary | Percentage Increase from Fiscal 2019 Base Salary(1) |
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Nazzic S. Keene | $1,000,000 | 33.3 | % |
Anthony J. Moraco | $1,060,000 | 2.9 | % |
Charles A. Mathis | $550,000 | 4.8 | % |
Steven G. Mahon | $575,000 | 15.0 | % |
Robert S. Genter | $450,000 | 5.9 | % |
James J. Scanlon | $450,000 | 5.9 | % |
Karen A. Wheeler | $415,000 | 7.8 | % |
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(1) | Ms. Keene's salary percentage increase is over her fiscal 2019 base salary as the company's Chief Operating Officer.33 | saic.com |
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COMPENSATION DISCUSSION AND ANALYSIS |
Annual Cash Incentive Awards
Each named executive officer’s total fiscal 20202021 short-term incentive ("STI") award depended upon the achievement of specific financial performance goals approved by our Committee and described below.
Performance goals for cash incentive awards. At the beginning of each fiscal year, the Committee sets and approves threshold, target and maximum performance goals for the upcoming year based on objective financial goals. Further, the Committee also reviews and approves the corresponding target cash incentive awards based upon the achievement of those goals. No amount is payable for below-threshold performance. When threshold performance is met, payouts are determined on a straight-line basis between threshold and target performance and between target and maximum performance.
Under our short-term incentive plan for fiscal 2020:2021:
• The award was determined by our company performance as well as a leadership component.
• The financial performance measures used - EBITDA, revenue, and cash flow generation - directly align to our overall strategy and support increases in stockholder value. EBITDA is a non-GAAP financial measure and should be read in conjunction with net income, a GAAP financial measure; see the Management's Discussion and Analysis of Financial Conditions and Results of Operations section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended January 31, 2020,29, 2021, for further information.
• The individual leadership component considered both business leadership competencies as well as people leadership competencies and could be used to modify and apply discretion to the final award amount based on the named executive officer’s performance during the year.
Performance measures for fiscal 2020.2021. The financial performance measures for fiscal 20202021 were closely aligned with the company’s strategy for sustained profitable growth and long-term value creation.
For fiscal 2020,2021, we maintained the financial measures and their relative weightings that we used in fiscal 2019.2020. The EBITDA metric, assigned a 50% relative weighting, emphasizes the focus on our profitability, which is critical to our long-term growth. The revenue and operating cash flow metrics, with weightings of 35% and 15%, respectively, focus the management team on revenue and cash flow generation. The financial performance measures, their relative weightings, the targeted and maximum achievement levels and actual performance for our short-term incentive program for fiscal 2020,2021, as approved by the Committee, were as follows:
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COMPENSATION DISCUSSION AND ANALYSIS |
Fiscal 20202021 Short-Term Incentive Awards
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Financial Measures(1) | Weight | Threshold | Target | Maximum | 2021 Actual(1) | % of Target Achieved | Payout % | 2020 Actual(1) |
Adjusted EBITDA | 50 | % | $554M | $652M | $750M | $643M | 98.6 | % | 95.4 | % | $538M |
Revenue | 35 | % | $6.593B | $7.326B | $8.059B | $7.318B | 99.9 | % | 99.5 | % | $6.379B |
Adjusted Operating Cash Flow | 15 | % | $392M | $490M | $588M | $498M | 101.6 | % | 108.2 | % | $454M |
Weighted Average for Financial Goals | | | | | 98.7 | % | |
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Financial Measures(1) | Weight |
| Threshold | Target | Maximum | 2020 Actual(1) | % of Target Achieved |
| Payout % |
| 2019 Actual(1) |
Adjusted EBITDA | 50 | % | $427M | $534M | $641M | $538M | 100.7 | % | 103.7 | % | $347M |
Revenue | 35 | % | $5.850B | $6.500B | $7.150B | $6.379B | 98.1 | % | 90.7 | % | $4.585B |
Adjusted Operating Cash Flow | 15 | % | $346M | $461M | $576M | $454M | 98.5 | % | 97 | % | $262M |
Weighted Average for Financial Goals | | | | | 98.2 | % | |
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(1) | (1) See the Appendix to this Proxy Statement for a reconciliation as to how each adjusted non-GAAP performance measure is calculated as compared to the most closely comparable GAAP measure. |
Determination of cash incentive award amounts. For fiscal 2020,2021, the Committee set the target amount of the cash incentive award at 125%130% of base salary for the Chief Executive Officer and between 60%75% and 85% of base salary for the other named executive officers based on applicable market data. In determining the payout level amount, the Committee applied the weighted average payout for financial goals (98.2%(98.7% in fiscal 20202021 as calculated in the table above) to the target cash incentive amount and further applied a leadership factor determined by the Committee for the Chief Executive Officer, and with input from the Chief Executive Officer for the other named executive officers. The leadership scores for the executive officers ranged between 1.0 and 1.2 based upon an assessment of each executive's performance in leading the business and leading employees. For our named executive officers, the target cash incentive award amounts as a percentage of base salary and award amounts earned in fiscal 20202021 were as follows:
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Name(1) | Base Salary |
| STI Target as % of Base Salary |
| Financial Score(2) |
| Cash Incentive Amount Paid |
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Nazzic S. Keene |
| $1,000,000 |
| 125 | % | 98.2 | % |
| $1,227,000 |
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Charles A. Mathis |
| $550,000 |
| 85 | % | 98.2 | % |
| $458,898 |
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Steven G. Mahon |
| $575,000 |
| 75 | % | 98.2 | % |
| $423,315 |
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Robert S. Genter |
| $450,000 |
| 60 | % | 101.0 | % |
| $327,337 |
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James J. Scanlon |
| $450,000 |
| 60 | % | 95.1 | % |
| $256,716 |
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(1) | A short-term incentive program target was not established for Mr. Moraco, the company's former CEO, for fiscal 2020. The Board approved a short-term cash incentive payment amount of $242,084 to Ms. Wheeler, SAIC's former Executive Vice President, Chief Human Resources Officer, based on an established target of 70% of base salary prorated for fiscal 2020 through December 1, 2019, her date of retirement. |
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(2) | To determine Mr. Genter and Mr. Scanlon’s fiscal 2020 cash incentive amount paid, the Committee applied a financial score based on a 75%/25% weighting of the 98.2% enterprise financial score and the financial score of the customer groups that they lead, respectively. |
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COMPENSATION DISCUSSION AND ANALYSIS |
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Name | Base Salary | STI Target as % of Base Salary | Financial Score(1) | Cash Incentive Amount Paid |
Nazzic S. Keene | $1,075,000 | 130 | % | 98.7 | % | $1,655,702 |
Charles A. Mathis | $575,000 | 85 | % | 98.7 | % | $482,543 |
Robert S. Genter | $600,000 | 80 | % | 101.2 | % | $534,283 |
Steven G. Mahon | $600,000 | 75 | % | 98.7 | % | $533,142 |
Michael W. LaRouche | $475,000 | 80 | % | 103.4 | % | $432,379 |
(1) To determine Mr. Genter and Mr. LaRouche's fiscal 2021 cash incentive amount paid, the Committee applied a financial score based on a 75%/25% weighting of the 98.7% enterprise financial score and the financial score of the business sectors that they lead, respectively.
Long-Term Incentive Awards
We generally target our named executive officers’ long-term incentive awardsaward opportunities at the median of the competitive market. In fiscal 2020,2021, we provided the following forms of long-term incentive compensation to our named executive officers:
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| Performance Shares—Incentivize our named executive officers to achieve specific measurable financial goals over a three-year performance cycle. Earned shares vest and are issued at the end of the performance cycle and range from 0% for below threshold performance to 150%200% of target number of shares for maximum performance. PSAs are granted in overlapping annual cycles and serve as a tool to align pay and company performance and to retain our named executive officers. Dividend equivalents are accumulated in cash and are paid at the end of the three-year performance cycle to the extent that the underlying share awards are earned. |
Restricted Stock Units—Align pay and company performance as reflected in our stock price, encourage retention of our named executive officers’ services and promote continued investment by our executives in company stock. RSUs awarded in fiscal 20202021 vest over a three-year period in 33% installments at each anniversary of the grant date. Dividend equivalents on unvested RSUs accumulate in cash and are paid when and if the underlying RSUs vest. |
Stock Options—Strongly alignAlign named executive officer and stockholder interests by having value only if the stock price increases over the term of the option. Stock options vest in 33% installments at the end of each of the first three years following grant and expire at the end of the seventh year. |
Fiscal 2020-20222021-2023 Performance Share Plan Awards
For fiscal 2020,2021, 50% of the long-term incentives awarded to our named executive officers were provided in the form of performance shares (valued at target payout). The performance measures and corresponding weightings for these awards are as follows:
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Performance Measures | Weight | Description |
Cumulative Adjusted EBITDA | 60% | A three-year average EBITDA growth goal measured against performance targets set at the beginning of the performance period |
Adjusted Annual Operating Cash Flow | 40% | An annual goal for each year is set at the beginning of the performance period |
At the beginning of each three-year performance period, the Committee establishes the performance measures to be used for that performance period, their weightings and the levels of performance on those measures for the entire three-year performance period that will generate threshold, target, and maximum payouts. The number of performance shares delivered at the end of the three-year performance cycle may range from 0% for below threshold performance to 50% for threshold performance and up to 150%200% for maximum performance. (For fiscal 2021-2023, the maximum payout percentage was increased to 200% from 150%.) When the performance threshold is met, payouts are determined on a linear interpolation basis for performance levels between threshold and target and between target and maximum. The final Performance Share Plan payout is delivered at the end of the three-year performance cycle.
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COMPENSATION DISCUSSION AND ANALYSIS |
The financial targets are closely aligned with the company’s long-term financial strategy and internal budgets, and not publicly disclosed at the time of the award issuance due to the proprietary and competitive nature of this information. Achievement and payouts for each of the above goals will be determined and disclosed by the Committee at the conclusion of fiscal 2022.2023.
Certification of fiscal 2018-20202019-2021 performance share plan awards. The Compensation Committee reviewed and approved performance against pre-established targets for the fiscal 2018-20202019-2021 plan. Payout amounts for fiscal 2018-20202019-2021 performance shares were as follows:
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COMPENSATION DISCUSSION AND ANALYSIS |
Fiscal 2018-20202019-2021 Performance Share Plan Payout
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Performance Measures | Performance Period | Weight | Threshold 50% | Target 100% | Maximum 150% | Actual(1) | % of Target Achieved | Payout |
Adjusted Cumulative Operating Income | FY19-21 | 60% | $1.386B | $1.597B | $1.710B | $1.518B | 95.0% | 81.2% |
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Adjusted Operating Cash Flow | FY19 | | $227M | $267M | $299M | $241M | 90.3% | 67.5% |
| FY20 | 40% | $419M | $482M | $525M | $489M | 101.5% | 108.1% |
| FY21 | | $461M | $538M | $589M | $805M | 149.6% | 150.0% |
Weighted Average for Financial Goals | 92.2% |
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Performance Measures | Performance Period | Weight |
| Threshold 50% | Target 100% | Maximum 150% | Actual(1) | % of Target Achieved |
| Payout |
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Adjusted Cumulative Operating Income | FY18-20 | 60 | % | $1.030B | $1.159B | $1.281B | $1.105B | 95.4 | % | 79.2 | % |
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Adjusted Operating Cash Flow | FY18 | | $205M | $234M | $263M | $157M | 67.1 | % | 0.0 | % |
| FY19 | 40 | % | $187M | $227M | $271M | $229M | 100.9 | % | 102.3 | % |
| FY20 | | $387M | $445M | $520M | $483M | 108.5 | % | 125.3 | % |
Weighted Average for Financial Goals | 77.9 | % |
(1) See the Appendix to this Proxy Statement for a reconciliation as to how each adjusted non-GAAP performance measure is calculated as compared to the most closely comparable GAAP measure. | |
(1) | See the Appendix to this Proxy Statement for a reconciliation as to how each adjusted non-GAAP performance measure is calculated as compared to the most closely comparable GAAP measure. |
Other Benefits Provided in Fiscal 20202021
In addition to the elements of direct compensation described above, we also provide our named executive officers with the following benefits:
Health and welfare benefits. Our named executive officers are entitled to participate in allthe health and welfare plans that we generally offer to all of our eligible employees, which provide medical, dental, health, group term life insurance and disability benefits. We believe that these health and welfare benefits are reasonable in scope and amount and are of the kind typically offered by other companies against which we compete for executive talent. Additionally, our named executive officers are eligible to participate in a physical health program. The program provides the named executive officers with a comprehensive medical assessment and personalized preventive strategies to maintain and improve personal health.
Retirement benefits. Our named executive officers are entitled to participate in the same defined contribution retirement plan that is generally available to all of our eligible employees. Currently, we provide matching contributions to eligible participants’ retirement plan accounts based on a percentage of their eligible compensation under applicable rules. The average amount of contributions we made to the retirement plan accounts of our named executive officers in fiscal 20202021 was approximately $8,345$11,511 per person. The Committee believes that these contributions to this retirement program permit our named executive officers to save for their retirement in a tax-effective manner, are reasonable in scope and amount and are of the kind typically offered by other companies against which we compete for executive talent.
Deferred compensation plans. To provide other tax-deferred means to save for retirement, we maintain a deferred compensation plan that allows our named executive officers and other eligible participants to elect to defer all or a portion of any cash incentive awards granted to them under our incentive plans and a portion of their eligible salary. We make no contributions to named executive officers’ accounts under these plans. Vested deferred balances under the plans will generally be paid upon retirement or termination. This plan is described in more detail under “Executive Compensation, - Nonqualified Deferred Compensation” below in this Proxy Statement.
Perquisites and personal benefits. We do not provide excessive perquisites or personal benefits to our named executive officers.
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COMPENSATION DISCUSSION AND ANALYSIS |
Other Policies and Considerations
Assessment of Risks in our Compensation Programs
In the design and oversight of our compensation programs for named executive officers and all employees, the Committee, with assistance from the Committee’s independent compensation consultant and management, assesses risks related to our pay practices and incentive programs. The risk assessment is focused on identifying risks associated with our compensation programs and the mix of each type of compensation element we provide to our named executive officers and all employees, as well as the measures that the company may employ to mitigate those risks. The Committee believes that the following features of our compensation programs effectively mitigate excessive risk-taking that could harm our value or reward poor judgment by our named executive officers or other employees:
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COMPENSATION DISCUSSION AND ANALYSIS |
• short-term incentive measures are balanced among different financial measures, with goals that are intended to be achievable upon realistic levels of performance;
• significant weighting towards long-term incentive compensation promotes long-term decision making and discourages short-term risk-taking;
• goals are based on company performance measures, which mitigates excessive risk-taking within any particular business operation;
• maximum payouts are capped at levels that do not reward excessive risk-taking;
•our compensation recoupment policy allows us to recover compensation based on financial results that are subsequently restated or if fraud or intentional misconduct is involved; and
• our stock ownership guidelines encourage a long-term perspective.
Equity Award Grant Practices
The Committee is responsible for the administration of our equity incentive plans. Generally, in advance of each fiscal year, the Committee will select predetermined dates on which equity awards will be granted to our employees, including our named executive officers, during the following fiscal year. These grant dates are selected to occur after the dates we anticipate releasing our annual or quarterly financial results. We generally grant equity incentive awards to our directors, executive officers and all other eligible employees on an annual basis shortly after we announce our financial results for the recently completed fiscal year. In addition to these annual grants, the Committee predetermines four quarterly dates on which any additional equity incentive awards may be made to eligible named executive officers or other employees in connection with an offer of employment, for retention purposes or to recognize performance. The Committee approves all equity awards made to our named executive officers.
The exercise price of any option grant is determined by reference to the fair market value of the shares on the grant date, which our Amended and Restated 2013 Equity Incentive Plan defines as the closing sales price of our common stock shares on the NYSE on the trading day immediately preceding the grant date.
Stock Ownership Guidelines and Stock Holding Requirements
We encourage our employees to own our stock so that they are motivated to maximize our long-term performance and stock value. We have adopted stock ownership guidelines for our executive officers that require them to accumulate and maintain stockholdingsstock holdings calculated as a multiple of their base salary, depending on their role. The Chief Executive Officer is required to accumulate and hold shares with a value of five times her base salary and other named executive officers are required to accumulate and hold shares with a value of three times their respective base salaries.
In addition to stock ownership guidelines, we also maintain a stock holding requirements policy, which mandates that officers must hold 100% of the net shares acquired under our equity incentive programs until the applicable multiple of base salary is achieved. Ms. Keene Mr. Moraco, Mr. Scanlon, and Ms. Wheeler satisfied theirher ownership goals. Mr. Mathis,Natarajan, Mr. Genter, Mr. Mahon, and Mr. GenterLaRouche are making adequate progress toward achievement of their respective ownership goals.
Prohibition on Hedging or Pledging Company Stock or Purchasing “On Margin”
We have established policies that prohibit all executive officers, directors and employees from engaging in any short selling and hedging transactions in our securities that may carry a greater risk of liability for insider trading violations and also create an
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COMPENSATION DISCUSSION AND ANALYSIS |
appearance of impropriety. For example, with respect to our securities, our executive officers, directors and employees are not permitted to engage in any short sales or any trading in puts, calls or other derivatives on an exchange or other organized market. In addition, we prohibit our executive officers, directors and employees from pledging company stock as collateral for a loan or purchasing company stock “on margin.” Further, our executive officers, directors and employeessenior managers are required to obtain pre-clearance from our General Counsel for all transactions in our securities.
“Clawback” or Compensation Recoupment Policy
Under our “clawback” or compensation recoupment policy, the Committee may require executive officers and other employees who receive incentive compensation to return cash and equity incentives if there is a material restatement of the financial results upon which the incentive compensation was originally based. If the Committee determines that recovery is appropriate, we will seek repayment of the difference between the incentive compensation paid and the incentive compensation that would have been paid, if any, based on the restated financial results.
The policy also provides for recovery of cash and equity incentive compensation from any employee involved in fraud or intentional misconduct, whether or not it results in a restatement of our financial results. In that situation, the Committee would exercise its business judgment to determine what action it believes is appropriate under the circumstances.
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COMPENSATION DISCUSSION AND ANALYSIS |
We may seek to recover the applicable amount of compensation from incentive compensation paid or awarded after the adoption of the policy, from future payments of incentive compensation, cancellation of outstanding equity awards and reduction in or cancellation of future equity awards. In cases of fraud or misconduct, we may also seek recovery from incentive compensation paid or awarded prior to the adoption of the policy.
Post-Employment Benefits
We do not maintain a defined benefit or other supplemental retirement plan that would entitle our executive officers to receive company-funded payments if they leave the company.
Upon certain terminations of employment, including death, disability, retirement or a change in control, our employees, including our named executive officers, may be eligible for continued vesting of equity awards on the normal schedule or accelerated vesting in full or on a pro rata basis, depending on the nature of the event and the type of the award. The purpose of these provisions is to protect previously earned or granted awards by making them available following the specified event. Because these termination provisions are contained in our standard award agreements for all recipients and relate to previously granted or earned awards, we do not consider these potential termination benefits as a separate item in compensation decisions for our named executive officers. Our long-term incentive plans do not provide for additional benefits or tax gross-ups. For more information about potential post-employment benefits, see “Executive Compensation—Potential Payments upon Termination or a Change in Control” in this Proxy Statement.
Executive Severance and Change in Control Policy
We maintain an executive severance, and change in control and retirement policy which specifies the compensation and benefits payable in connection with certain termination events for our executive officers in both change in control, and non-change in control, and retirement events as further described in this Proxy Statement under “Executive Compensation—Potential Payments upon Termination or a Change in Control.” We believe that this policy provides an important benefit to us by helping alleviate any concern the executive officers might have during a potential change in control of our company and permitting them to focus their attention on our business. In addition, we believe that this policy is an important recruiting and retention tool, as many of the companies with which we compete for talent have similar arrangements in place for their senior management.
There are no excise tax gross-up provisions authorized by the policy. This policy renews for successive one-year terms each year, unless the company provides notice to the eligible executive officers of either amendments to the policy or termination of the policy or has provided notice to an individual eligible executive officer that he or she is no longer eligible for the policy no later than OctoberNovember 1 of the term year. This annual term permits the Committee to review regularly review the amount of benefits that would be provided to our executive officers in connection with certain termination events and to consider whether to continue providing those benefits.
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2021 Proxy Statement | 38 |
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COMPENSATION DISCUSSION AND ANALYSIS |
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally limits the deductibility of certain compensation in excess of $1 million paid in any one year to certain covered officers. Previously, qualified performance-based compensation was not subject to this deduction limit, if certain requirements were met.
The exemption from the Section 162(m) deduction limit for performance-based compensation was repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to any “covered employee” in excess of $1 million is not deductible, unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. A “covered employee” under Section 162(m) is any employee who has served as our CEO, CFO or other named executive officers for tax years after December 31, 2016. The rules and regulations promulgated under Section 162(m) are complicated and the transition relief under the legislation repealing Section 162(m)’s performance-based exemption from the deduction limit is complex. As such, there can be no guarantee that compensation intended to satisfy the requirements for tax deductibility in fact will.
While the Committee will continue to take into account the tax and accounting implications (including with respect to the expected lack of deductibility under the revised Section 162(m)) when making compensation decisions, it reserves the right to make compensation decisions based on other factors if the Committee determines it is in the best interests to do so. Further, taking into account the elimination of the exemption for performance-based compensation under Section 162(m), the Committee may determine to make changes or amendments to its existing compensation programs in order to revise aspects of our programs that were initially designed to comply with Section 162(m) but that may no longer serve as an appropriate incentive measure for our executive officers.
Human Resources and Compensation Committee Report
The Human Resources and Compensation Committee has reviewed and discussed with our management the Compensation Discussion and Analysis included in this Proxy Statement. Based upon this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Steven R. Shane (Chair)
Robert A. Bedingfield
Carol A. Goode
David M. KerkoGarth N. Graham
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2020 Proxy Statement39 | 42saic.com |
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS |
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation earned by our named executive officers. The compensation set forth below was earned for service to SAIC during fiscal 2020,2021, and, if applicable, during fiscal 20192020 and fiscal 2018.2019. All compensation is disclosed, whether or not such amounts were paid in such year:
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Name and principal position | Fiscal Year(1) | Salary ($) | Bonus ($)(2) | Stock awards ($)(3) | Option awards ($)(3) | Non-equity incentive plan compensation ($)(4) | All other compensation ($)(5) | Total ($) |
Nazzic S. Keene Chief Executive Officer | 2021 | 1,063,462 | — | | 3,150,053 | 1,050,008 | 1,655,702 | 17,477 | 6,936,702 |
2020 | 961,539 | — | 2,953,210 | 950,014 | 1,227,000 | 14,085 | 6,105,848 |
2019 | 734,616 | — | 1,500,006 | 500,008 | 985,500 | 16,237 | 3,736,367 |
Prabu Natarajan Chief Financial Officer | 2021 | 34,615 | 500,000 | 500,078 | — | — | — | 1,034,693 |
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Charles A. Mathis Former Executive Vice President and Chief Financial Officer | 2021 | 571,154 | — | | 900,068 | 300,017 | 482,543 | 13,000 | 2,266,782 |
2020 | 546,154 | — | 917,052 | 295,015 | 458,898 | 12,677 | 2,229,796 |
2019 | 525,000 | — | 825,118 | 275,004 | 561,940 | 15,079 | 2,202,141 |
Robert S. Genter President, Defense and Civilian Sector | 2021 | 576,923 | — | | 1,000,041 | 250,014 | 534,283 | 11,400 | 2,372,661 |
2020 | 446,154 | — | 616,348 | — | 327,337 | 9,738 | 1,399,577 |
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Steven G. Mahon Executive Vice President and General Counsel | 2021 | 596,154 | — | | 750,020 | 250,014 | 533,142 | 13,700 | 2,143,030 |
2020 | 563,461 | — | 777,222 | 250,015 | 423,315 | 11,654 | 2,025,667 |
2019 | 492,298 | — | 600,071 | 200,015 | 459,900 | 11,185 | 1,763,469 |
Michael W. LaRouche President, National Security and Space Sector | 2021 | 463,462 | — | 812,592 | 187,506 | 432,379 | 14,054 | 1,909,993 |
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Name and principal position | Fiscal Year(1) | Salary ($) | Bonus ($)(2) |
| Stock awards ($)(3) |
| Option awards ($)(3) |
| Non-equity incentive plan compensation ($)(4) |
| All other compensation ($)(5) | Total ($) |
Nazzic S. Keene Chief Executive Officer | 2020 | 961,539 | — |
| 2,953,210 |
| 950,014 |
| 1,227,000 |
| 14,085 | 6,105,848 |
2019 | 734,616 | — |
| 1,500,006 |
| 500,008 |
| 985,500 |
| 16,237 | 3,736,367 |
2018 | 632,308 | — |
| 1,075,138 |
| 325,002 |
| 571,375 |
| 12,104 | 2,615,926 |
Anthony J. Moraco Former Chief Executive Officer | 2020 | 545,326 | 700,000 |
| — |
| — |
| — |
| 53,746 | 1,299,072 |
2019 | 1,025,385 | 1,000,000 |
| 3,375,120 |
| 1,125,004 |
| 1,691,775 |
| 17,088 | 8,234,372 |
2018 | 1,000,000 | — |
| 3,187,552 |
| 1,062,509 |
| 1,162,500 |
| 15,230 | 6,427,791 |
Charles A. Mathis Executive Vice President and Chief Financial Officer | 2020 | 546,154 | — |
| 917,052 |
| 295,015 |
| 458,898 |
| 12,677 | 2,229,796 |
2019 | 525,000 | — |
| 825,118 |
| 275,004 |
| 561,940 |
| 15,079 | 2,202,141 |
2018 | 521,154 | — |
| 825,050 |
| 275,004 |
| 394,347 |
| 127,961 | 2,143,516 |
Steven G. Mahon Executive Vice President and General Counsel | 2020 | 563,461 | — |
| 777,222 |
| 250,015 |
| 423,315 |
| 11,654 | 2,025,667 |
2019 | 492,298 | — |
| 600,071 |
| 200,015 |
| 459,900 |
| 11,185 | 1,763,469 |
2018 | 446,154 | — |
| 450,073 |
| 150,010 |
| 322,314 |
| 10,892 | 1,379,443 |
Karen A. Wheeler Former Executive Vice President and Chief Human Resources Officer | 2020 | 395,361 | — |
| 505,252 |
| 162,505 |
| — |
| 1,259,294 | 2,322,412 |
2019 | 376,539 | — |
| 393,876 |
| 131,269 |
| 315,127 |
| 12,854 | 1,229,665 |
2018 | 330,000 | — |
| 318,835 |
| 106,257 |
| 193,389 |
| 15,484 | 963,965 |
Robert S. Genter Executive Vice President, General Manager, Civilian Markets Customer Group | 2020 | 446,154 | — |
| 616,348 |
| — |
| 327,337 |
| 9,738 | 1,399,577 |
James J. Scanlon Executive Vice President, General Manager, Defense Systems Customer Group | 2020 | 446,154 | — |
| 565,063 |
| — |
| 256,716 |
| 9,238 | 1,277,171 |
(1) Compensation is provided only for fiscal years for which each individual qualified as a named executive officer. | |
(1) | Compensation is provided only for fiscal years for which each individual qualified as a named executive officer. |
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(2) | This column reflects bonus payments made to Mr. Moraco in recognition of the successful execution of the corporate growth strategy in fiscal 2019 and for certain transition services provided to SAIC before his retirement in fiscal 2020. |
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(3) | These columns reflect the grant date fair value computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718). The awards shown in the “Stock awards” column in the above table include RSUs and PSAs. Values for those PSAs are computed based on the target number of shares. Assuming the maximum level of the performance conditions is achieved, the value of the fiscal 2020 PSAs included in the “Stock Awards” column would be as follows: Ms. Keene, $2,953,210; Mr. Mathis, $917,052; Mr. Mahon, $777,222; Ms. Wheeler, $505,252; Mr. Genter, $616,348; and Mr. Scanlon, $565,063. Ms. Keene received a one-time RSU award of $100,040 in June 2017 (fiscal 2018) as an inducement to assume the Chief Operating Officer role with expanded responsibilities. |
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| For more information regarding our application of FASB ASC Topic 718, including the assumptions used in the calculations of these amounts, please refer to Note 8 of Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal 2020 filed with the SEC on March 27, 2020. |
(2) In connection with his appointment as Chief Financial Officer, Mr. Natarajan received a sign-on bonus of $500,000.
(3) These columns reflect the grant date fair value computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718). The awards shown in the “Stock awards” column in the above table include RSUs and PSAs. Values for those PSAs are computed based on the target number of shares. If the maximum level of the performance conditions were achieved, the value of the fiscal 2021 PSAs included in the “Stock Awards” column would be as follows: Ms. Keene, $4,200,021; Mr. Mathis, $1,200,090; Mr. Genter, $1,000,026; Mr. Mahon, $1,000,026; and Mr. LaRouche, $750,093. Mr. Natarajan received a one-time RSU grant of $500,000 in in connection with his appointment as Chief Financial Officer. Mr. Genter and Mr. LaRouche each received one-time RSU grants of $250,000 to recognize their expanded roles as Presidents of the Defense and Civilian Sector and National Security and Space Sector, respectively.
For more information regarding our application of FASB ASC Topic 718, including the assumptions used in the calculations of these amounts, please refer to Note 8 of Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal 2021 filed with the SEC on March 26, 2021.
(4) Amounts shown in this column represent the actual amounts paid to the named executive officers under our cash incentive award program for performance in fiscal 2021. The threshold, target and maximum payouts are shown in the “Grants of Plan-Based Awards” table under the column headed “Estimated future payouts under non-equity incentive plan awards.”
(5) Amounts shown in this column for fiscal 2021 include matching contributions made by the company in the SAIC Retirement Plan on behalf of our named executive officers as follows: Ms. Keene, $11,400; Mr. Mathis, $11,400; Mr. Genter, $11,400; Mr. Mahon, $11,400; and Mr. LaRouche, $11,954. Amounts shown also include payments or reimbursements of fees during fiscal 2021 related to the executive health benefit on behalf of our named executive officers as follows: Ms. Keene, $4,325; Mr. Mathis, $1,600; Mr. Mahon, $2,300; and Mr. LaRouche, $2,100. Amounts shown for Ms. Keene also include taxable transportation expenses of $1,752.
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(4) | Amounts shown in this column represent the actual amounts paid to the named executive officers under our cash incentive award program for performance in fiscal 2020. The threshold, target and maximum payouts are shown in the “Grants of Plan-Based Awards” table under the column headed “Estimated future payouts under non-equity incentive plan awards.” |
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(5) | Amounts shown in this column for fiscal 2020 include matching contributions made by the company in the SAIC Retirement Plan on behalf of our named executive officers as follows: Ms. Keene, $7,738; Mr. Moraco, $6,446; Mr. Mathis, $8,777; Mr. Mahon, $9,354; Ms. Wheeler, $9,423; Mr. Genter, $7,438; and Mr. Scanlon, $9,238. Amounts shown also include payments or reimbursements of fees during fiscal 2020 related to the executive health benefit on behalf of our named executive officers as follows: Ms. Keene, $4,325; Mr. Moraco, $2,300; Mr. Mathis, $3,900; Mr. Mahon, $2,300; Mr. Genter, $2,300; and Ms. Wheeler, $3,900. Amounts shown for Ms. Keene also include association membership dues of $1,025 and taxable transportation expenses of $997. Amounts shown for Mr. Moraco also include a lump sum premium cost of $45,000 for the continuation of health insurance coverage through 18 months following his retirement. Amounts for Ms. Wheeler also include a total cash severance of $1,245,971. |
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Grants of Plan-Based Awards
The following table sets forth information regarding the cash and equity incentive awards made to our named executive officers in fiscal 20202021 pursuant to our Amended and Restated 2013 Equity Incentive Plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated future payouts under non-equity incentive plan awards(1) | Estimated future payouts under equity incentive plan awards(2) | All other stock awards; number of shares of stock or units (#)(3) | All other option awards; number of securities underlying options (#)(4) | Exercise or base price of option awards ($/share) (5) | Closing market price on the date of grant ($) | Grant date fair value of stock and option awards ($)(6) |
Name | Award type | Grant date | Approval date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
Ms. Keene | Cash | — | — | 698,750 | 1,397,500 | 2,795,000 | — | — | — | — | — | | — | — | — | |
| Options | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | — | 60,624 | | 73.77 | 71.30 | 1,050,008 | |
| PSA | 04/03/2020 | 03/24/2020 | — | — | — | 14,234 | 28,467 | 56,934 | — | | — | | — | — | 2,100,011 | |
| RSU | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | 14,234 | | — | | — | — | 1,050,042 | |
Mr. Natarajan | RSU | 01/04/2021 | 12/10/2020 | — | — | — | — | — | — | 5,284 | | — | | — | — | 500,078 | |
Mr. Mathis | Cash | — | | — | | 244,375 | 488,750 | 977,500 | — | — | — | — | — | — | — | — | |
| Options | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | — | 17,322 | | 73.77 | 71.30 | 300,017 | |
| PSA | 04/03/2020 | 03/24/2020 | — | — | — | 4,067 | 8,134 | 16,268 | — | | — | | — | — | 600,045 | |
| RSU | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | 4,067 | — | | — | — | 300,023 | |
Mr. Genter | Cash | — | | — | | 240,000 | 480,000 | 960,000 | — | — | — | — | — | | — | — | — | |
| Options | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | — | 14,435 | | 73.77 | 71.30 | 250,014 | |
| PSA | 04/03/2020 | 03/24/2020 | — | — | — | 3,389 | 6,778 | 13,556 | — | | — | | — | — | 500,013 | |
| RSU | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | 3,389 | | — | | — | — | 250,007 | |
| RSU | 12/11/2020 | 12/10/2020 | — | — | — | — | — | — | 2,509 | | — | | — | — | 250,022 | |
Mr. Mahon | Cash | — | | — | | 225,000 | 450,000 | 900,000 | — | — | — | — | | — | | — | — | — | |
| Options | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | — | | 14,435 | | 73.77 | 71.30 | 250,014 |
| PSA | 04/03/2020 | 03/24/2020 | — | — | — | 3,389 | 6,778 | 13,556 | — | | — | | — | — | 500,013 | |
| RSU | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | 3,389 | — | | — | — | 250,007 | |
Mr. LaRouche | Cash | — | | — | | 190,000 | 380,000 | 760,000 | — | — | — | — | — | | — | — | |
| Options | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | — | 10,826 | | 73.77 | 71.30 | 187,506 |
| PSA | 04/03/2020 | 03/24/2020 | — | — | — | 2,542 | 5,084 | 10,168 | — | | — | | — | — | 375,047 | |
| RSU | 04/03/2020 | 03/24/2020 | — | — | — | — | — | — | 2,542 | | — | | — | — | 187,523 | |
| RSU | 12/11/2020 | 12/10/2020 | — | — | — | — | — | — | 2,509 | | — | | — | — | 250,022 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated future payouts under non-equity incentive plan awards(1) | Estimated future payouts under equity incentive plan awards(2) | All other stock awards; number of shares of stock or units (#)(3) | All other option awards; number of securities underlying options (#)(4) | Exercise or base price of option awards ($/share) (5) | Closing market price on the date of grant ($) | Grant date fair value of stock and option awards ($)(6) |
Name | Award type | Grant date | Approval date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
Ms. Keene | Cash | — |
| — |
| 625,000 |
| 1,250,000 |
| 2,500,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Options | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 56,853 |
| 74.97 |
| 75.91 |
| 950,014 |
|
| PSA | 05/22/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| 12,672 |
| 25,344 |
| 38,016 |
| — |
| — |
| — |
| — |
| 2,003,190 |
|
| RSU | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 12,672 |
| — |
| — |
| — |
| 950,020 |
|
Mr. Mathis | Cash | — |
| — |
| 233,750 |
| 467,500 |
| 935,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Options | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 17,655 |
| 74.97 |
| 75.91 |
| 295,015 |
|
| PSA | 05/22/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| 3,935 |
| 7,870 |
| 11,805 |
| — |
| — |
| — |
| — |
| 622,045 |
|
| RSU | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 3,935 |
| — |
| — |
| — |
| 295,007 |
|
Mr. Mahon | Cash | — |
| — |
| 215,625 |
| 431,250 |
| 862,500 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Options | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 14,962 |
| 74.97 |
| 75.91 |
| 250,015 |
|
| PSA | 05/22/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| 3,335 |
| 6,670 |
| 10,005 |
| — |
| — |
| — |
| — |
| 527,197 |
|
| RSU | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 3,335 |
| — |
| — |
| — |
| 250,025 |
|
Mr. Genter | Cash | — |
| — |
| 135,000 |
| 270,000 |
| 540,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Options | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| PSA | 05/22/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| 2,001 |
| 4,002 |
| 6,003 |
| — |
| — |
| — |
| — |
| 316,318 |
|
| RSU | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 4,002 |
| — |
| — |
| — |
| 300,030 |
|
Mr. Scanlon | Cash | — |
| — |
| 135,000 |
| 270,000 |
| 540,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Options | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| PSA | 05/22/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| 1,835 |
| 3,669 |
| 5,504 |
| — |
| — |
| — |
| — |
| 289,998 |
|
| RSU | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 3,669 |
| — |
| — |
| — |
| 275,065 |
|
Ms. Wheeler | Cash | — |
| — |
| 145,250 |
| 290,500 |
| 581,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Options | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 9,725 |
| 74.97 |
| 75.91 |
| 162,505 |
|
| PSA | 05/22/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| 2,168 |
| 4,336 |
| 6,504 |
| — |
| — |
| — |
| — |
| 342,717 |
|
| RSU | 04/05/2019 |
| 03/26/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 2,168 |
| — |
| — |
| — |
| 162,535 |
|
(1) Amounts in these columns represent the threshold, target and maximum payout amounts of cash incentive awards with actual payouts based upon the achievement of pre-established levels of performance during fiscal 2021, as discussed in our CD&A in this Proxy Statement. The actual amounts that were paid to our named executive officers with respect to fiscal 2021 are set forth in the table entitled “Summary Compensation Table” under the column headed “Non-equity incentive plan compensation.” | |
(1) | Amounts in these columns represent the threshold, target and maximum payout amounts of cash incentive awards with actual payouts based upon the achievement of pre-established levels of performance during fiscal 2020, as discussed in our CD&A in this Proxy Statement. The actual amounts that were paid to our named executive officers with respect to fiscal 2020 are set forth in the table entitled “Summary Compensation Table” under the column headed “Non-equity incentive plan compensation.” |
| |
(2) | Amounts in these columns represent PSAs which are subject to performance goals related to the three-year cumulative adjusted EBITDA and adjusted annual operating cash flow. Shares are issuable at the end of the three-year performance cycle provided that the predetermined goals have been satisfied, subject to the Human Resources and Compensation Committee’s discretion to decrease the number of shares that are ultimately issued at the end of the performance cycle. The grant date fair values of the PSAs based on the target number of shares are provided in the “Summary Compensation Table” under the column headed “Stock awards.” |
| |
(3) | Amounts in this column represent RSUs which vest as to 33% on the first, second, and third year anniversaries of the date of grant. |
| |
(4) | Amounts in this column represent the number of shares of common stock underlying options issued in fiscal 2020. All options vest as to 33% of the underlying shares on the first, second and third year anniversaries of the date of grant. |
| |
(5) | (2) Amounts in these columns represent PSAs which are subject to performance goals related to the three-year cumulative adjusted EBITDA and adjusted annual operating cash flow. Shares are issuable at the end of the three-year performance cycle provided that the predetermined goals have been satisfied, subject to the Human Resources and Compensation Committee’s discretion to decrease the number of shares that are ultimately issued at the end of the performance cycle. The grant date fair values of the PSAs based on the target number of shares are provided in the “Summary Compensation Table” under the column headed “Stock awards.” (3) Amounts in this column represent RSUs which vest as to 33% on the first, second, and third year anniversaries of the date of grant. (4) Amounts in this column represent the number of shares of common stock underlying options issued in fiscal 2021. All options vest as to 33% of the underlying shares on the first, second and third year anniversaries of the date of grant. (5) The exercise price of stock options granted under our Amended and Restated 2013 Equity Incentive Plan is the “fair market value” of our common stock on the date of grant, which is defined as the closing sales price of our common stock on the NYSE on the trading day before the grant date. |
(6) Amounts represent the grant date fair value determined in accordance with FASB ASC Topic 718. These amounts do not reflect the value that may be actually realized by the recipient and do not reflect changes in our stock price after the date of grant. The values included for the performance shares awards are based on the target number of shares.
| |
(6) | Amounts represent the grant date fair value determined in accordance with FASB ASC Topic 718. These amounts do not reflect the value that may be actually realized by the recipient and do not reflect changes in our stock price after the date of grant. The values included for the performance shares awards are based on the target number of shares. |
|
| | |
| | Science Applications International Corporation |
2020 Proxy Statement | 46 |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information regarding outstanding options, RSUs and PSAs that were held by our named executive officers at the end of fiscal 2020.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option awards(1) | Stock awards |
Name | Grant Date | Number of securities underlying unexercised options (exercisable) (#) | Number of securities underlying unexercised options (unexercisable) (#) | Option exercise price ($) | Option expiration date | Number of shares of stock or units that have not vested (#)(2) | Market value of shares of stock or units that have not vested ($)(3) | Equity Incentive Plan awards; number of unearned shares, units or other rights that have not vested (#)(4) | Equity Incentive Plan awards; market or payout value of unearned shares, units or other rights that have not vested ($)(3) |
Ms. Keene | 04/03/2020 | — | | 60,624 | | 73.77 | | 04/02/2027 | 21,824 | | 2,095,759 | | 22,106 | | 2,122,874 | |
| 05/22/2019 | — | | — | | — | | | 8,879 | | 852,637 | | 16,972 | | 1,629,847 | |
| 04/05/2019 | 18,950 | | 37,903 | | 74.97 | | 04/04/2026 | 8,449 | | 811,357 | | — | | — | |
| 04/06/2018 | 17,300 | | 8,651 | | 85.31 | | 04/05/2025 | 2,931 | | 281,464 | | — | | — | |
| 06/16/2017 | — | | — | | — | | | 339 | | 32,554 | | — | | — | |
| 04/07/2017 | 19,774 | | — | | 72.91 | | 04/06/2024 | 1,115 | | 107,073 | | — | | — | |
| 04/01/2016 | 29,302 | | — | | 53.34 | | 03/31/2023 | — | | — | | — | | — | |
| 04/10/2015 | 24,427 | | — | | 52.11 | | 04/09/2022 | — | | — | | — | | — | |
Mr. Natarajan | 01/04/2021 | — | | — | | — | | | 5,284 | | 507,423 | | — | | — | |
Mr. Mathis | 04/03/2020 | — | | 17,322 | | 73.77 | | 04/02/2027 | 6,235 | | 598,747 | | 6,317 | | 606,619 | |
| 05/22/2019 | — | | — | | — | | | 2,756 | | 264,699 | | 5,271 | | 506,189 | |
| 04/05/2019 | 5,884 | | 11,771 | | 74.97 | | 04/04/2026 | 2,624 | | 251,983 | | — | | — | |
| 04/06/2018 | 9,515 | | 4,758 | | 85.31 | | 04/05/2025 | 1,612 | | 154,800 | | — | | — | |
| 04/07/2017 | — | | — | | — | | | 943 | | 90,556 | | — | | — | |
Mr. Genter | 12/11/2020 | — | | — | | — | | | 2,509 | | 240,939 | | — | | — | |
| 04/03/2020 | — | | 14,435 | | 73.77 | | 04/02/2027 | 5,195 | | 498,876 | | 5,264 | | 505,507 | |
| 05/22/2019 | — | | — | | — | | | 1,402 | | 134,638 | | 2,680 | | 257,349 | |
| 04/05/2019 | — | | — | | — | | | 2,669 | | 256,304 | | — | | — | |
| 04/06/2018 | — | | — | | — | | | 1,246 | | 119,653 | | — | | — | |
| 04/07/2017 | — | | — | | — | | | 686 | | 65,877 | | — | | — | |
Mr. Mahon | 04/03/2020 | — | | 14,435 | | 73.77 | | 04/02/2027 | 5,195 | | 498,876 | | 5,264 | | 505,507 | |
| 05/22/2019 | — | | — | | — | | | 2,336 | | 224,325 | | 4,468 | | 429,019 | |
| 04/05/2019 | 4,987 | | 9,975 | | 74.97 | | 04/04/2026 | 2,224 | | 213,571 | | — | | — | |
| 04/06/2018 | 6,920 | | 3,461 | | 85.31 | | 04/05/2025 | 1,173 | | 112,643 | | — | | — | |
| 04/07/2017 | 9,127 | | — | | 72.91 | | 04/06/2024 | 515 | | 49,455 | | — | | — | |
Mr. LaRouche | 12/11/2020 | — | | — | | — | | | 2,509 | | 240,939 | | — | | — | |
| 04/03/2020 | — | | 10,826 | | 73.77 | | 04/02/2027 | 3,896 | | 374,133 | | 3,949 | | 379,193 | |
| 05/22/2019 | — | | — | | — | | | 1,168 | | 112,180 | | 2,234 | | 214,509 | |
| 04/05/2019 | — | | — | | — | | | 4,448 | | 427,141 | | — | | — | |
|
| | | | | | | | | | | | | | | | | |
| | Option awards(1)�� | Stock awards |
Name | Grant Date | Number of securities underlying unexercised options (exercisable) (#) | Number of securities underlying unexercised options (unexercisable) (#) | Option exercise price ($) | Option expiration date | Number of shares of stock or units that have not vested (#)(2) | Market value of shares of stock or units that have not vested ($)(3) | Equity Incentive Plan awards; number of unearned shares, units or other rights that have not vested (#)(4) | Equity Incentive Plan awards; market or payout value of unearned shares, units or other rights that have not vested ($)(3) |
Ms. Keene | 05/22/2019 | — |
| — |
| — |
| — |
| 4,134 |
| 362,831 |
| 19,455 |
| 1,707,596 |
|
| 04/05/2019 | — |
| 56,853 |
| 74.97 |
| 04/04/2026 |
| 12,672 |
| 1,112,221 |
| — |
| — |
|
| 04/06/2018 | 8,650 |
| 17,301 |
| 85.31 |
| 04/05/2025 |
| 6,281 |
| 551,265 |
| 7,300 |
| 640,695 |
|
| 06/16/2017 | — |
| — |
| — |
| — |
| 678 |
| 59,508 |
| — |
| — |
|
| 04/07/2017 | 13,182 |
| 6,592 |
| 72.91 |
| 04/06/2024 |
| 2,229 |
| 195,639 |
| — |
| — |
|
| 04/01/2016 | 29,302 |
| — |
| 53.34 |
| 03/31/2023 |
| 1,395 |
| 122,439 |
| — |
| — |
|
| 04/10/2015 | 24,427 |
| — |
| 52.11 |
| 04/09/2022 |
| — |
| — |
| — |
| — |
|
| 04/11/2014 | 15,459 |
| — |
| 38.77 |
| 04/10/2021 |
| — |
| — |
| — |
| — |
|
Mr. Moraco | 04/06/2018 | — |
| 38,927 |
| 85.31 |
| 04/05/2025 |
| 11,990 |
| 1,052,401 |
| 6,688 |
| 587,043 |
|
| 04/07/2017 | — |
| 21,549 |
| 72.91 |
| 04/06/2024 |
| 7,287 |
| 639,580 |
| — |
| — |
|
| 04/01/2016 | — |
| — |
| — |
| — |
| 4,980 |
| 437,095 |
| — |
| — |
|
Mr. Mathis | 05/22/2019 | — |
| — |
| — |
| — |
| 1,283 |
| 112,640 |
| 6,042 |
| 530,276 |
|
| 04/05/2019 | — |
| 17,655 |
| 74.97 |
| 04/04/2026 |
| 3,935 |
| 345,375 |
| — |
| — |
|
| 04/06/2018 | 4,757 |
| 9,516 |
| 85.31 |
| 04/05/2025 |
| 3,455 |
| 303,251 |
| 4,015 |
| 352,431 |
|
| 04/07/2017 | 11,154 |
| 5,578 |
| 72.91 |
| 04/06/2024 |
| 1,886 |
| 165,534 |
| — |
| — |
|
Mr. Mahon | 05/22/2019 | — |
| — |
| — |
| — |
| 1,088 |
| 95,459 |
| 5,120 |
| 449,425 |
|
| 04/05/2019 | — |
| 14,962 |
| 74.97 |
| 04/04/2026 |
| 3,335 |
| 292,713 |
| — |
| — |
|
| 04/06/2018 | 3,460 |
| 6,921 |
| 85.31 |
| 04/05/2025 |
| 2,513 |
| 220,538 |
| 2,920 |
| 256,293 |
|
| 04/07/2017 | 6,084 |
| 3,043 |
| 72.91 |
| 04/06/2024 |
| 1,029 |
| 90,315 |
| — |
| — |
|
| 04/01/2016 | 13,082 |
| — |
| 53.34 |
| 03/31/2023 |
| 623 |
| 54,681 |
| — |
| — |
|
Mr. Genter | 05/22/2019 | — |
| — |
| — |
| — |
| 652 |
| 57,233 |
| 3,073 |
| 269,686 |
|
| 04/05/2019 | — |
| — |
| — |
| — |
| 4,402 |
| 386,395 |
| — |
| — |
|
| 04/06/2018 | — |
| — |
| — |
| — |
| 1,869 |
| 164,042 |
| 1,551 |
| 136,158 |
|
| 04/07/2017 | — |
| — |
| — |
| — |
| 4,982 |
| 437,270 |
| — |
| — |
|
| 04/01/2016 | 4,702 |
| — |
| 53.34 |
| 03/31/2023 |
| 1,372 |
| 120,420 |
| — |
| — |
|
| 04/10/2015 | — |
| — |
| — |
| — |
| 457 |
| 40,111 |
| — |
| — |
|
| 04/11/2014 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Mr. Scanlon | 05/22/2019 | — |
| — |
| — |
| — |
| 598 |
| 52,508 |
| 2,817 |
| 247,214 |
|
| 04/05/2019 | — |
| — |
| — |
| — |
| 3,669 |
| 322,028 |
| — |
| — |
|
| 04/06/2018 | — |
| — |
| — |
| — |
| 7,251 |
| 636,451 |
| 1,551 |
| 136,158 |
|
| 04/07/2017 | — |
| — |
| — |
| — |
| 1,201 |
| 105,412 |
| — |
| — |
|
| 04/01/2016 | 8,619 |
| — |
| 53.34 |
| 03/31/2023 |
| 411 |
| 36,073 |
| — |
| — |
|
| 04/10/2015 | 6,691 |
| — |
| 52.11 |
| 04/09/2022 |
| — |
| — |
| — |
| — |
|
| 04/11/2014 | 11,805 |
| — |
| 38.77 |
| 04/10/2021 |
| — |
| — |
| — |
| — |
|
| 04/05/2013 | 2,191 |
| — |
| 27.81 |
| 04/04/2020 |
| — |
| — |
| — |
| — |
|
Ms. Wheeler | 05/22/2019 | — |
| — |
| — |
| — |
| 707 |
| 62,065 |
| 3,329 |
| 292,151 |
|
| 04/05/2019 | — |
| 9,725 |
| 74.97 |
| 04/04/2026 |
| 2,168 |
| 190,285 |
| — |
| — |
|
| 04/06/2018 | 2,270 |
| 4,543 |
| 85.31 |
| 04/05/2025 |
| 1,649 |
| 144,769 |
| 1,917 |
| 168,264 |
|
| 04/07/2017 | 4,309 |
| 2,156 |
| 72.91 |
| 04/06/2024 |
| 729 |
| 63,984 |
| — |
| — |
|
| 04/01/2016 | — |
| — |
| — |
| — |
| 435 |
| 38,180 |
| — |
| — |
|
| 04/10/2015 | 1,189 |
| — |
| 52.11 |
| 04/09/2022 |
| — |
| — |
| — |
| — |
|
| 04/11/2014 | 1,948 |
| — |
| 38.77 |
| 04/10/2021 |
| — |
| — |
| — |
| — |
|
| 04/05/2013 | 974 |
| — |
| 27.81 |
| 04/04/2020 |
| — |
| — |
| — |
| — |
|
(1) Information in these columns relates to options to purchase shares of common stock held by our named executive officers at the end of fiscal 2021.
|
| | | | | | | |
47Science Applications International Corporation |
2021 Proxy Statement | saic.com42 |
(2) Information in this column relates to RSUs held by our named executive officers at the end of fiscal 2021. RSUs vest over a three-year period in 33% installments at each anniversary of the grant date. (RSUs awarded prior to fiscal 2020 vest over a four-year period in 25% installments at each anniversary of the grant date.) Additionally, this column includes the portion of the performance share awards for the fiscal 2020-2022 and the fiscal 2021-2023 award cycles that are subject to performance goals based on annual operating cash flow for fiscal 2020 and fiscal 2021, respectively. These performance shares have been earned as of the end of fiscal 2021 based on operating cash flow performance and will vest and be settled in shares only at the end of the three-year performance cycle if the named executive officer remains employed by the company at the end of the performance cycle or is eligible for severance or retirement benefits provided under the SAIC Executive Severance, Change in Control and Retirement Policy. Award payout is subject to the Human Resources and Compensation Committee’s discretion to decrease the number of shares that are ultimately issued at the end of the performance cycle.
| |
(1) | Information in these columns relates to options to purchase shares of common stock held by our named executive officers at the end of fiscal 2020. Options granted prior to April 2014 vest as to 20%, 20%, 20% and 40% of the underlying shares on the first, second, third and fourth year anniversaries of the date of grant, respectively. Options granted in April 2014 and later vest as to 33% on the first, second and third year anniversaries of the date of grant. |
| |
(2) | Information in this column relates to RSUs held by our named executive officers at the end of fiscal 2020. RSUs vest as to 33% on each of the first, second, and third anniversaries of the date of grant. (RSUs awarded prior to fiscal 2020 vest over a four-year period in 25% installments at each anniversary of the grant date.) Additionally, this column includes the portion of the PSAs for the fiscal 2019-2021 and the fiscal 2020-2022 award cycles that are subject to performance goals based on annual operating cash flow for fiscal 2019 and fiscal 2020, respectively. These performance shares have been earned as of the end of fiscal 2020 based on operating cash flow performance and will vest and be settled in shares only at the end of the three-year performance cycle if the named executive officer remains employed by the company at the end of the performance cycle. Award payout is subject to the Human Resources and Compensation Committee’s discretion to decrease the number of shares that are ultimately issued at the end of the performance cycle. Any RSUs previously deferred by our named executive officers are also reflected in the table below under the caption “Nonqualified Deferred Compensation.” |
| |
(3) | Based on $87.77 per share, the closing sales price of our common stock on the NYSE on January 31, 2020. |
| |
(4) | The number of performance shares reflected in this column represent the performance shares awarded for the fiscal 2019-2021 and fiscal 2020-2022 performance cycles that can be earned based on the company’s cumulative operating income performance over the full three-year cycles. It also includes the performance shares awarded for 2019-2021 performance cycle that are subject to annual operating cash flow performance goals and the performance shares awarded for 2020-2022 performance cycle that are subject to the cumulative adjusted EBITDA performance goals that have not yet been earned as of the end of fiscal 2020, namely those performance shares allocated to the third one-year performance period for fiscal 2019-2021 cycle and those performance shares allocated to the second and third one-year performance periods for the fiscal 2020-2022 cycle. Vesting of PSAs for fiscal 2019-2021 is determined at the end of the three-year performance period of January 29, 2021 and vesting of PSAs for fiscal 2020-2022 is determined at the end of the three-year performance period on January 28, 2022. The number of performance shares that can be earned based on annual operating cash flow performance and the number of performance shares that can be earned based on three-year adjusted EBITDA performance has been disclosed in this column at an assumed target payout level. |
(3) Based on $96.03 per share, the closing sales price of our common stock on the NYSE on January 29, 2021.
(4) The number of performance shares reflected in this column represent the performance shares awarded for the fiscal 2020-2022 and fiscal 2021-2023 performance cycles that can be earned based on the company’s cumulative EBITDA, as well as the performance shares awarded for those same performance cycles that are subject to annual operating cash flow performance goals and have not yet been earned as of the end of fiscal 2021, namely those performance shares allocated to the third one-year performance period for the fiscal 2020-2022 cycle and those performance shares allocated to the second and third one-year performance periods for the fiscal 2021-2023 cycle. Vesting of performance share awards for fiscal 2020-2022 is determined at the end of the three-year performance period of January 28, 2022, and vesting of performance share awards for fiscal 2021-2023 is determined at the end of the three-year performance period on February 3, 2023. The number of performance shares that can be earned based on annual operating cash flow performance and the number of performance shares that can be earned based on three-year adjusted EBITDA performance has been disclosed in this column at an assumed target payout level.
|
| | |
| | Science Applications International Corporation |
2020 Proxy Statement | 48 |
Option Exercises and Stock Vested
The following table sets forth information regarding shares of common stock acquired by our named executive officers during fiscal 20202021 upon the exercise of stock options, the vesting of RSUs and the vesting of fiscal 2018-20202019-2021 PSAs.
| | | | | | | | | | | | | | |
| Option awards | Stock awards |
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($)(1) | Number of shares acquired on vesting (#)(2) | Value realized on vesting ($)(1) |
Ms. Keene | 15,459 | | 893,221 | | 19,338 | | 1,667,939 | |
Mr. Mathis | 16,732 | | 348,862 | | 9,003 | | 795,565 | |
Mr. Genter | 4,702 | | 206,371 | | 10,376 | | 817,651 | |
Mr. Mahon | 13,082 | | 611,191 | | 7,156 | | 622,149 | |
Mr. LaRouche | — | | — | | 2,222 | | 165,183 | |
|
| | | | | | |
| Option awards | Stock awards |
Name | Number of shares acquired on exercise (#) |
| Value realized on exercise ($)(1) |
| Number of shares acquired on vesting (#)(2) | Value realized on vesting ($)(1) |
Ms. Keene | — |
| — |
| 12,636 | 1,044,777 |
Mr. Moraco | 272,720 |
| 9,398,413 |
| 16,838 | 1,277,836 |
Mr. Mathis | — |
| — |
| 7,624 | 647,838 |
Mr. Mahon | — |
| — |
| 5,567 | 465,788 |
Mr. Genter | — |
| — |
| 4,396 | 358,751 |
Mr. Scanlon | 1,461 |
| 66,760 |
| 3,879 | 316,405 |
Ms. Wheeler | 974 |
| 47,292 |
| 1,565 | 118,771 |
(1) Value realized on exercise or vesting disclosed above is based on the closing price of our common stock on the NYSE on the exercise or vest date; however, the actual value realized by the named executive officer was determined using the closing price on the trading date immediately preceding the exercise or vest date in accordance with the fair market value definition in the Amended and Restated 2013 Equity Incentive Plan. For the earned fiscal 2019-2021 PSAs, the value is based on the closing price per share of our common stock on the NYSE on January 29, 2021 of $96.03. | |
(1) | Value realized on exercise or vesting disclosed above is based on the closing price of our common stock on the NYSE on the exercise or vest date, however, the actual value realized by the named executive officer was determined using the closing price on the trading date immediately preceding the exercise or vest date in accordance with the fair market value definition in the Amended and Restated 2013 Equity Incentive Plan. For the earned fiscal 2018-2020 PSAs, the value is based on the closing price per share of our common stock on the NYSE on January 31, 2020 of $87.77. |
| |
(2) | Includes performance shares earned in connection with the PSA for the fiscal 2018-2020(2) Includes performance shares earned in connection with the PSA for the fiscal 2019-2021 performance period and a portion of time-based RSUs granted during previous fiscal years. |
Nonqualified Deferred Compensation
We provided benefits to our named executive officers during fiscal 20202021 under the following nonqualified deferred compensation plans whichthat are summarized below:
The SAIC Key Executive Stock Deferral Plan was closed on December 31, 2014 and no further deferrals are allowed. Participant balances generally correspond to stock units of our common stock which may be held by a rabbi trust to fund benefits for participants. We make no contributions to participants’ accounts under the Key Executive Stock Deferral Plan. Distributions under the Key Executive Stock Deferral Plan are then made to participants in shares of common stock corresponding to the number of vested stock units held for the participant. Vested deferred balances under this plan will generally be paid upon retirement or separation from service.
The SAIC 401(k) Excess Deferral Plan ("Excess Plan") was closed on December 31, 2014 and no further deferrals are allowed. The investment options in the Excess Plan are similar to those in the SAIC Retirement Plan but do not include the SAIC Stock Fund. Vested deferred balances under this plan will generally be paid following retirement or separation from service.
The SAIC Deferred Compensation Plan became effective January 1, 2015 and is a pre-tax savings plan that allows eligible participants to defer up to 80% of their salary and cash bonus compensation as well as director retainer and meeting fees. Effective January 31, 2016, the SAIC Stock Fund was discontinued as an investment option in the Deferred Compensation Plan. Deferrals into the Deferred Compensation Plan are not included as eligible compensation for the calculation of the company match in the SAIC Retirement Plan. If there is a loss of company match in the SAIC Retirement Plan because of a deferral into the Deferred Compensation Plan, the company may, at its sole discretion, make up the difference in company matching contribution to the Deferred Compensation Plan. Participants may elect to have deferred balances paid on a specific date while they are still employed or upon retirement or separation of service.
The SAIC Management Stock Compensation Plan is a long-term incentive plan that prior to September 27, 2013 awarded tax-deferred bonuses in the form of restricted share units. Shares may be deposited to a rabbi trust to fund benefits for participants. Distributions under the Management Stock Compensation Plan are then made to participants in shares of common stock corresponding to the number of vested stock units held for the participant. Vested deferred balances under this plan will generally be paid upon retirement or separation from service. The Management Stock Compensation Plan was closed on September 27, 2013 and no further deferrals are allowed.
The following table sets forth information regarding deferrals under and aggregate earnings and withdrawals in fiscal 20202021 through our nonqualified deferred compensation plans in which the named executive officers participated. There were no company matching contributions made to the named executive officers’ accounts under any of the plans in fiscal 2020.2021.
| | | | | | | | | | | | | | | | | |
Name(1) | Plan | Executive contributions in fiscal 2021 ($)(2) | Aggregate earnings in fiscal 2021 ($)(3) | Aggregate withdrawals/ distributions in fiscal 2021 | Aggregate balance at fiscal year-end ($)(4) |
Mr. Genter | Excess Plan | — | | 2,157 | | — | | 18,585 | |
| Deferred Compensation Plan | 923 | | 14,323 | | — | | 79,853 | |
Mr. Mahon | Deferred Compensation Plan | 105,829 | | 334,767 | | — | | 1,673,641 | |
Mr. LaRouche | Deferred Compensation Plan | 270,864 | | 104,084 | | — | | 464,604 | |
|
| | | | | | | | |
Name(1) | Plan | Executive contributions in fiscal 2020 ($)(2) |
| Aggregate earnings in fiscal 2020 ($)(3) | Aggregate withdrawals/ distributions in fiscal 2020 |
| Aggregate balance at fiscal year-end ($)(4) |
|
Mr. Moraco | Key Executive Stock Deferral Plan | — |
| 88,695 | — |
| 364,227 |
|
| Management Stock Compensation Plan | — |
| 28,836 | — |
| 118,416 |
|
| Excess Plan | — |
| 10,392 | — |
| 99,240 |
|
| Deferred Compensation Plan | 888,286 |
| 299,475 | — |
| 3,047,125 |
|
Mr. Mahon | Deferred Compensation Plan | 329,373 |
| 141,267 | — |
| 1,233,045 |
|
Mr. Genter | Excess Plan | — |
| 1,726 | — |
| 16,429 |
|
| Deferred Compensation Plan | 32,746 |
| 6,101 | — |
| 64,607 |
|
Mr. Scanlon | Key Executive Stock Deferral Plan | — |
| 119,493 | — |
| 490,699 |
|
| Deferred Compensation Plan | — |
| 8,026 | — |
| 64,936 |
|
Ms. Wheeler | Management Stock Compensation Plan | — |
| 28,836 | — |
| 118,416 |
|
(1) Ms. Keene, Mr. Natarajan and Mr. Mathis are not included in this table because they did not participate in any nonqualified deferred compensation plans in fiscal 2021. | |
(1) | Mr. Mathis and Ms. Keene are not included in this table because they did not participate in any nonqualified deferred compensation plans in fiscal 2020. |
| |
(2) | (2) Amounts in this column include salary deferrals in fiscal 2021 and annual incentive bonus paid in fiscal 2021 for fiscal 2020 and annual incentive bonus paid in fiscal 2020 for fiscal 2019 performance. For Mr. LaRouche, $174,058 and Mr. Genter, $923 of this amount is reported as fiscal 2021 compensation in the Summary Compensation Table. (3) With respect to the Excess Plan and the Deferred Compensation Plan, amounts in this column represent aggregate returns on the investments elected by participants from the diverse investment options available to participants under the plans. Participants may change their investment elections at any time. The returns on the investment options available to eligible participants during fiscal 2021 ranged from 0.32% to 68.92%. The amounts in this column are not included in the Summary Compensation Table. (4) Amounts in this column represent the value of the holders’ accounts at the end of fiscal 2021, which includes the following amounts reported in the Summary Compensation Table for the amounts contributed by the plan holder for the prior year: Mr. Mahon, $105,829; and Mr. LaRouche, $96,806.
$99,423 of his amount is reported as fiscal 2020 compensation in the Summary Compensation Table.
|
|
| | | | | | | |
| | Science Applications International Corporation |
20202021 Proxy Statement | 5044 |
| |
(3) | With respect to the Key Executive Stock Deferral Plan and the Management Stock Compensation Plan, amounts in this column represent the aggregate change in value of stock units corresponding to shares of our common stock during fiscal 2020. The market value of the shares is based upon $87.77 per share, the closing sales price of our common stock on the NYSE on January 31, 2020. |
| |
| With respect to the Excess Plan and the Deferred Compensation Plan, amounts in this column represent aggregate returns on the investments elected by participants from the diverse investment options available to participants under the plans. Participants may change their investment elections at any time. The returns on the investment options available to eligible participants during fiscal 2020 ranged from -3.79% to 17.01%. The amounts in this column are not included in the Summary Compensation Table.
|
| |
(4) | Amounts in this column represent the value of the holders’ accounts at the end of fiscal 2020, which includes the following amounts reported in the Summary Compensation Table for the amounts contributed by the plan holder for the prior year: Mr. Moraco, $888,286; and Mr. Mahon, $229,950. With respect to the Key Executive Stock Deferral Plan and the Management Stock Compensation Plan, the amounts represent the value of stock units corresponding to shares of common stock held by Mr. Moraco based on $87.77 per share, the closing sales price of our common stock on the NYSE on January 31, 2020. At the end of fiscal 2020, Mr. Moraco held the following number of stock units in the following plans: Key Executive Stock Deferral Plan – 4,150, and Management Stock Compensation Plan – 1,349. Ms. Wheeler held 1,349 stock units in the Management Compensation Plan. Mr. Scanlon held 5,591 stock units in the Key Executive Stock Deferral Plan.
|
Potential Payments upon Termination or a Change in Control
We have an Executive Severance, and Change in Control and Retirement Policy (“Severance Policy”) that applies to designated eligible officers, including all of our active named executive officers, which became effective as of AugustJuly 1, 20192020 and which provides certain benefits to the active named executive officers upon their termination of employment under the circumstances described below, including in connection with a change in control.control or retirement. In addition, our Amended and Restated 2013 Equity Incentive Plan (“2013 Plan”) and the award agreements thereunder provide for accelerated vesting and exercisability of equity awards under the circumstances described below, including in connection with a change in control.
Severance Policy. Under the Severance Policy, if an active named executive officer is involuntarily terminated without cause or resigns for good reason within 18090 days preceding or 1221 months following a change in control, he or she will be entitled to receive a lump sum cash payment equal to two times (or three times in the case of our chief executive officer) the sum of (i) the executive officer’s then current annual base salary and (ii) the target annual incentive bonus for the fiscal year in which the termination occurs. If the executive officer’s annual base salary was higher during the 180-day90-day period prior to the change in control, that higher amount will be used to determine the amount of the lump sum cash payment to which the executive officer is entitled. The executive officer is also entitled to receive a cash payment in an amount equal to 24 months (or 36 months in the case of our chief executive officer) of the monthly COBRA premium for continued group medical coverage for the executive officer and his or her eligible dependents, and outplacement services for a period of 12 months and up to a maximum of $25,000.$25,000, and a lump sum cash payment equal to a pro-rata portion of the executive's target annual bonus opportunity for the bonus cycle in which the termination occurs. For a change of control related termination, the named executive officer's previously granted equity awards will be governed by the terms of the 2013 Plan.
Under the terms of the Severance Policy, if an active named executive officer is involuntarily terminated without cause or resigns for good reason other than during the period before or after a change in control as described above, he or she will be entitled to receive a cash payment equal to 1.5 times (or two times in the case of our chief executive officer) the sum of (i) the executive officer’s then current annual base salary and (ii) the average of the most recent three actual annual cash bonuses (or the average of all of the actual annual cash bonuses paid if the executive officer has not been employed by us for at least three annual bonus cycles). The executive will continue to vest in all previously granted awards under the 2013 Plan per the original terms of the award, but without any minimum holding period requirements and without any proration of the award. The executive officer is also entitled to receive a cash payment in an amount equal to 18 months (or 24 months in the case of our chief executive officer) of the monthly COBRA premium for continued group medical coverage for the executive officer and his or her eligible dependents, and outplacement services for a period of 12 months and up to a maximum of $25,000.$25,000, and a lump sum cash payment equal to a pro-rata portion of the executive's annual bonus opportunity for the bonus cycle in which the executive's termination occurs to be paid per the Company's usual payment schedule at the percentage payable per the Company's fiscal year annual bonus financial performance scores.
Under the terms of the Severance Policy, if an active named executive officer intends to retire and provides the Company with at least six months advanced written notice of their termination and agrees to sign a two year non-compete agreement, he or she will be entitled to receive a cash payment in an amount equal to 18 months (or 24 months in the case of our chief executive officer) of the monthly COBRA premium for continued group medical coverage for the executive officer and his or her eligible dependents and a lump sum cash payment equal to a pro-rata portion of the executive's target annual bonus opportunity for the bonus cycle in which the termination occurs. The executive will continue to vest in all previously granted awards under the 2013 Plan per the original terms of the award, but without any minimum holding period requirements and without any proration of the award.
The Severance Policy generally defines “cause” for termination as (i) conviction, or plea of no contest, of fraud, embezzlement, theft or other felony, (ii) willful engagement in illegal conduct or gross misconduct, or (iii) failure to perform employment duties in a reasonably satisfactory manner after notice from the Company and a 30-day opportunity to cure the failure. A resignation is generally defined to be for “good reason” if it is due to (i) a material adverse change in authority, duties or responsibilities, (ii) a material reduction in base salary or target bonus, or (iii) a relocation of the individual’s principal place of employment of more than 50 miles, and the Company has failed to remedy the event or condition after receiving notice of the same. The Severance Policy defines a “change in control” in the same manner as the term is defined in our 2013 Plan, as described below.
Equity Awards. Under our 2013 Plan, the vesting of stock option and RSU awards will accelerate in full if the successor entity in a change in control does not assume or replace outstanding awards or, if such awards are assumed or replaced, the award recipient’s employment ends within 18 months after the change in control due to termination without cause or resignation for good reason. The award agreements for PSAs issued under our 2013 Plan provide that if a change in control occurs before the end of a performance period, the performance period will be terminated and an award recipient will be entitled to receive, immediately prior to the change in control, a number of shares equal to the number determined by the committee to have been earned for each fiscal year in the performance period completed before the change in control, plus a pro rata portion of the shares determined by the committee to have been earned during the year in which the change in control occurred.
The 2013 Plan generally defines a “change in control” as (i) a merger or consolidation in which the Company is not the surviving corporation, (ii) a merger in which the Company is the surviving corporation but after which the Company’s pre-merger shareholders no longer own their Company shares, (iii) a sale of substantially all of the Company’s assets, or (iv) the acquisition, sale or transfer of more than 50% of the Company’s outstanding shares by tender offer or similar transaction. “Cause” for termination is generally defined in the 2013 Plan as employment-related dishonesty, fraud or misconduct likely to cause significant injury to the Company or its personnel, and “good reason” is defined in a manner similar to that under the Severance Policy.
Other than in the context of a change in control, RSU awards and option awards will vest in full immediately if employment ends due to death or disability, and, under those circumstances, options will remain exercisable for a period of time, which under the 2013 Plan is until the expiration date of the option award. Our PSA agreements provide that if employment ends due to death, an award recipient’s estate will be entitled to promptly receive a number of shares determined in the same manner as if a change in control had occurred on the date of death. If employment ends due to disability, a pro rata portion (based on the portion of the performance period completed prior to the employment termination) of the performance shares determined to have been earned at the end of the three-year performance period will be paid out after the end of the performance period.
|
| | |
| | Science Applications International Corporation |
2020 Proxy Statement | 52 |
Under our retiree vesting program, employees who retire, including our named executive officers, may continue vesting in their stock option awards if they have held those options for at least 12 months prior to retirement and they retire (i) after age 59 1/2 with at least ten years of service or (ii) after age 59 1/2when age at termination plus years of service equals at least 70. Our executive officers who retire after reaching the applicable mandatory retirement age, however, will be allowed to continue to vest in their option awards without regard to the 12 month holding requirement. Under the same conditions, executive officers may continue vesting in their RSU awards, and may receive the same pro rata payout of PSAs as applies in the event of a termination due to disability. We have the right to terminate continued vesting if a retiree violates confidentiality, non-solicitation or similar obligations to us. None of our named executive officers was eligible for a benefit under our Retiree Vesting Program as of January 31, 2020,29, 2021, the last day of our most recent fiscal year.
In any other termination scenario involving an equity award recipient, including a named executive officer, the 2013 Plan provides that all unvested RSUs, options and PSAs are forfeited. Under these circumstances, vested options remain exercisable for 90 days or until the option expiration date, if earlier. However, as noted above, the Severance policy allows designated eligible officers, including all of our active named executive officers, to continue vesting in their equity awards if the executive officer is involuntarily terminated without cause or as a result of their retirement.
Other Separation Agreements. In connection with the termination of Mr. Mathis from the Company, Mr. Mathis and the Company entered into a separation agreement that entitles Mr. Mathis to receive: (i) a Cash payment of $1,570,093, which is equal to 1.5 multiplied by the sum of Mr. Mathis' base salary and three-year average bonus payments, payable on the 60th day following the termination; (ii) a cash payment of $28,416.06, which is equal to 18 months of the monthly COBRA premium for continued group medical coverage for the executive officer and his eligible dependents; (iii) continue vesting in all previously granted awards under the 2013 Plan per the original terms of the award, but without any minimum holding period requirements and without any proration of the award; (iv) a cash payment equal to a pro-rata portion of Mr. Mathis' annual bonus opportunity for the bonus cycle in which the termination occurred, to be paid per the Company's usual payment schedule and at the percentage payable per the Company's fiscal year annual bonus financial performance scores; and (v) outplacement services for a period of 12 months and up to a maximum of $25,000.
Estimated Termination and Change in Control Payments and Benefits.The following table sets forth our estimates of the payments and benefits to be made to our named executive officers under various termination and change in control scenarios. In calculating the amounts set forth in the table, we have assumed that (i) the date of termination was January 31, 2020,29, 2021, the last business day of fiscal year 2020,2021, (ii) the date of any related change in control was the same date, and (iii) the price of our common stock was $87.77$96.03 per share, the closing market price of our common stock on the NYSE on January 31, 2020.29, 2021. The table does not reflect payments and benefits that are provided on a non-discriminatory basis to salaried employees generally upon termination, nor does it reflect amounts attributable to equity-based awards that were already vested, or distributions of plan balances under our non-qualified deferred compensation plan. Because the employment of Mr. Moraco and Ms. Wheeler was terminated under circumstancesMathis is not covered byincluded in the table they have been omitted.as a result of his separation from the Company on January 4, 2021. The severance payments and benefits received by Mr. Mathis are described above under the "Other Separation Agreements" section.
|
| | | | | | | |
53Science Applications International Corporation |
2021 Proxy Statement | saic.com46 |
|
| | | | | | | | |
Name | Without Cause or With Good Reason Termination (not in connection with a Change in Control) ($) |
| Without Cause or With Good Reason Termination (in connection with a Change in Control) (1) ($) |
| Death ($) |
| Disability ($) |
|
Ms. Keene | | | | |
Severance(2) | 3,378,915 |
| 6,750,000 |
| — |
| — |
|
Medical coverage continuation(3) | — |
| — |
| — |
| — |
|
Outplacement services(4) | 25,000 |
| 25,000 |
| — |
| — |
|
Stock options(5) | — |
| 868,236 |
| 868,236 |
| 868,236 |
|
Restricted stock units(6) | — |
| 1,917,527 |
| 1,917,527 |
| 1,917,527 |
|
Performance shares(7) | — |
| 1,402,627 |
| 1,402,627 |
| (9 | ) |
Applicable scale back(8) | — |
| — |
| — |
| — |
|
Total | 3,403,915 |
| 10,963,390 |
| 4,188,390 |
| 2,785,763 |
|
Mr. Mathis | | | | |
Severance(2) | 1,350,193 |
| 2,035,000 |
| — |
| — |
|
Medical coverage continuation(3) | 28,416 |
| 37,888 |
| — |
| — |
|
Outplacement services(4) | 25,000 |
| 25,000 |
| — |
| — |
|
Stock options(5) | — |
| 332,282 |
| 332,282 |
| 332,282 |
|
Restricted stock units(6) | — |
| 740,216 |
| 740,216 |
| 740,216 |
|
Performance shares(7) | — |
| 587,759 |
| 587,759 |
| (9 | ) |
Applicable scale back(8) | — |
| — |
| — |
| — |
|
Total | 1,403,609 |
| 3,758,145 |
| 1,660,257 |
| 1,072,498 |
|
Mr. Mahon | | | | |
Severance(2) | 1,393,302 |
| 2,012,500 |
| — |
| — |
|
Medical coverage continuation(3) | — |
| — |
| — |
| — |
|
Outplacement services(4) | 25,000 |
| 25,000 |
| — |
| — |
|
Stock options(5) | — |
| 253,758 |
| 253,758 |
| 253,758 |
|
Restricted stock units(6) | — |
| 606,840 |
| 606,840 |
| 606,840 |
|
Performance shares(7) | — |
| 458,488 |
| 458,488 |
| (9 | ) |
Applicable scale back(8) | — |
| (627,339 | ) | — |
| — |
|
Total | 1,418,302 |
| 2,729,247 |
| 1,319,086 |
| 860,598 |
|
Mr. Genter | | | | |
Severance(2) | 1,093,113 |
| 1,440,000 |
| — |
| — |
|
Medical coverage continuation(3) | 28,418 |
| 37,891 |
| — |
| — |
|
Outplacement services(4) | 25,000 |
| 25,000 |
| — |
| — |
|
Stock options(5) | — |
| — |
| — |
| — |
|
Restricted stock units(6) | — |
| 692,018 |
| 692,018 |
| 692,018 |
|
Performance shares(7) | — |
| 256,114 |
| 256,114 |
| (9 | ) |
Applicable scale back(8) | — |
| — |
| — |
| — |
|
Total | 1,146,531 |
| 2,451,023 |
| 948,132 |
| 692,018 |
|
Mr. Scanlon | | | | |
Severance(2) | 1,039,954 |
| 1,440,000 |
| — |
| — |
|
Medical coverage continuation(3) | 33,170 |
| 44,227 |
| — |
| — |
|
Outplacement services(4) | 25,000 |
| 25,000 |
| — |
| — |
|
Stock options(5) | — |
| — |
| — |
| — |
|
Restricted stock units(6) | — |
| 642,526 |
| 642,526 |
| 642,526 |
|
Performance shares(7) | — |
| 246,060 |
| 246,060 |
| (9 | ) |
Applicable scale back(8) | — |
| — |
| — |
| — |
|
Total | 1,098,124 |
| 2,397,813 |
| 888,586 |
| 642,526 |
|
| | | | | | | | | | | | | | | | | |
Name | Without Cause Termination (not in connection with a Change in Control) ($) | Without Cause or With Good Reason Termination (in connection with a Change in Control) (1) ($) | Retirement ($) | Death ($) | Disability ($) |
Ms. Keene | | | | | |
Bonus(2) | 1,250,000 | | 1,250,000 | | 1,250,000 | | — | | — | |
Severance(3) | 4,005,917 | | 7,417,500 | | — | | — | | — | |
Medical coverage continuation(4) | — | | — | | — | | — | | — | |
Outplacement services(5) | 25,000 | | 25,000 | | — | | — | | — | |
Stock options(6) | 2,240,466 | | 2,240,466 | | 2,240,466 | | 2,240,466 | | 2,240,466 | |
Restricted stock units(7) | 2,655,778 | | 2,655,778 | | 2,655,778 | | 2,655,778 | | 2,655,778 | |
Performance shares(8) | (10) | 2,945,680 | | (10) | 2,945,680 | | (11) |
Applicable scale back(9) | — | | — | | — | | — | | — | |
Total | 10,177,161 | | 16,534,424 | 6,146,244 | 7,841,924 | 4,896,244 |
Mr. Natarajan | | | | | |
Bonus(2) | — | | — | | — | | — | | — | |
Severance(3) | 900,000 | | 1,200,000 | | — | | — | | — | |
Medical coverage continuation(4) | 49,306 | | 65,741 | | 49,306 | | — | | — | |
Outplacement services(5) | 25,000 | | 25,000 | | — | | — | | — | |
Stock options(6) | — | | — | | — | | — | | — | |
Restricted stock units(7) | 507,423 | | 507,423 | | 507,423 | | 507,423 | | 507,423 | |
Performance shares(8) | — | | — | | — | | — | | — | |
Applicable scale back(9) | — | | — | | — | | — | | — | |
Total | 1,481,729 | | 1,798,164 | | 556,729 | | 507,423 | | 507,423 | |
Mr. Genter | | | | | |
Bonus(2) | 270,000 | | 270,000 | | 270,000 | | — | | — | |
Severance(3) | 1,365,065 | | 2,160,000 | | — | | — | | — | |
Medical coverage continuation(4) | 34,371 | | 45,828 | | 34,371 | | — | | — | |
Outplacement services(5) | 25,000 | | 25,000 | | — | | — | | — | |
Stock options(6) | 321,323 | | 321,323 | | 321,323 | | 321,323 | | 321,323 | |
Restricted stock units(7) | 1,027,260 | | 1,027,260 | | 1,027,260 | | 1,027,260 | | 1,027,260 | |
Performance shares(8) | (10) | 563,264 | | (10) | 563,264 | | (11) |
Applicable scale back(9) | — | | — | | — | | — | | — | |
Total | 3,043,019 | 4,412,675 | 1,652,954 | 1,911,847 | 1,348,583 |
Mr. Mahon | | | | | |
Bonus(2) | 431,250 | | 431,250 | | 431,250 | | — | | — | |
Severance(3) | 1,502,765 | | 2,100,000 | | — | | — | | — | |
Medical coverage continuation(4) | — | | — | | — | | — | | — | |
Outplacement services(5) | 25,000 | | 25,000 | | — | | — | | — | |
Stock options(6) | 568,499 | | 568,499 | | 568,499 | | 568,499 | | 568,499 | |
Restricted stock units(7) | 717,842 | | 717,842 | | 717,842 | | 717,842 | | 717,842 | |
Performance shares(8 | (10) | 744,309 | | (10) | 744,309 | | (11) |
Applicable scale back(9) | — | | — | | — | | — | | — | |
Total | 3,245,356 | 4,586,900 | 1,717,591 | 2,030,650 | 1,286,341 |
Mr. LaRouche | | | | | |
Bonus(2) | 240,000 | | 240,000 | | 240,000 | | — | | — | |
Severance(3) | 1,075,524 | | 1,710,000 | | — | | — | | — | |
Medical coverage continuation(4) | 39,333 | | 52,444 | | 39,333 | | — | | — | |
Outplacement services(5) | 25,000 | | 25,000 | | — | | — | | — | |
Stock options(6) | 240,987 | | 240,987 | | 240,987 | | 240,987 | | 240,987 | |
Restricted stock units(7) | 926,531 | | 926,531 | | 926,531 | | 926,531 | | 926,531 | |
Performance shares(8) | (10) | 445,143 | | (10) | 445,143 | | (11) |
Applicable scale back(9) | — | | — | | — | | — | | — | |
Total | 2,547,375 | 3,640,105 | 1,446,851 | 1,612,661 | 1,167,518 |
|
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| | Science Applications International Corporation |
2020 Proxy Statement47 | 54saic.com |
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(1) | (1) The change in control consequences for PSAs are the same whether or not a qualifying termination (involuntary termination without cause or resignation for good reason) occurs in connection with the change in control. With respect to option and RSU awards, the 2013 Plan also provides for accelerated vesting and exercisability of the awards if the successor corporation does not assume or replace the awards in connection with the change in control. |
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(2) | In the case of a qualifying termination not in connection with a change in control, severance amounts represent a single lump sum payment equal to two times for Ms. Keene and 1.5 times for all other named executive officers the sum of (a) the named executive officer's fiscal 2020 base salary and (b) the average of the annual bonuses paid for fiscal 2019, 2018 and 2018. In the case of a qualifying termination in connection with a change in control, severance amounts represent a single lump sum payment equal to three times for Ms. Keene and two times for all other named executive officers of the sum of (a) the named executive officer's fiscal 2020 base salary and (b) his or her target annual bonus for fiscal 2020. |
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(3) | In the case of a qualifying termination not in connection with a change in control, these amounts represent a lump sum cash payment of COBRA benefits for 24 months for the Chief Executive Officer and 18 months for all other named executive officers. In the case of a qualifying termination in connection with a change in control, these amounts represent a lump sum cash payment of COBRA benefits for 36 months for Ms. Keene and 24 months for all other named executive officers. Ms. Keene and Mr. Mahon do not participate in the Company’s group medical coverage. |
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(4) | These amounts represent the maximum value to the named executive officer of outplacement counseling services to be provided for 12 months following a qualifying termination. |
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(5) | These amounts represent the value of unvested options to purchase shares of our common stock issued under the 2013 Plan that were held by the named executive officer at the end of fiscal 2020 and whose vesting was accelerated in connection with a change in control or termination due to death or disability. The value was calculated by multiplying the number of shares subject to the option whose vesting was accelerated by the difference between the closing market price per share of our common stock on the NYSE on January 31, 2020 and the applicable option exercise price. For more information regarding the number of shares underlying unvested options held by each of the named executive officers, see the table under the caption "Outstanding Equity Awards at Fiscal Year-End." |
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(6) | These amounts represent the value of RSUs issued under the 2013 Plan that were held by the named executive officer at the end of fiscal 2020 and whose vesting was accelerated in connection with a change in control or termination due to death or disability. The value was calculated by multiplying the number of RSUs whose vesting was accelerated by the closing market price per share of our common stock on the NYSE on January 31, 2020, and includes accrued dividend equivalents as of January 31, 2020. For more information regarding the number of unvested RSUs held by each of the named executive officers, see the table under the caption "Outstanding Equity Awards at Fiscal Year-End." |
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(7) | These amounts represent the value of shares underlying outstanding PSAs issued under the 2013 Plan that were held by the named executive officer at the end of fiscal 2020 and whose vesting was accelerated in connection with a change in control or termination due to death. The value was calculated by multiplying the number of performance shares whose vesting was accelerated by the closing market price per share of our common stock on the NYSE on January 31, 2020, and includes accrued dividend equivalents as of January 31, 2020. The number of performance shares whose vesting was accelerated was determined based on the sum of: (i) the actual number of shares earned by each named executive officer for the part of the award allocated to our annual operating cash flow performance goals for fiscal 2019 and 2020, and (ii) either (a) for the fiscal year 2019 grant, one-third of the shares allocated to the three-year cumulative adjusted EBITDA performance goal assuming results of approximately 84.9% of target, or (b) for the fiscal year 2020 grant, one-third of the shares allocated to the three-year cumulative adjusted EBITDA performance goal assuming results of approximately 84.5% of target, each for the portion of the performance period prior to the termination of employment. The number of actual shares earned by each named executive officer based on operating cash flow for fiscal 2019 was 67.5% of target for the fiscal 2019 award, and for fiscal 2020 was 120.6% and 122.3% of target for the respective awards. Note that PSAs from fiscal 2018 are not included in this table since they are deemed to be earned as of January 31, 2020. |
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(8) | This represents the amount by which cash severance payments would be reduced in accordance with our severance policy to avoid excise taxes which would otherwise be payable pursuant to Sections 280G and 4999 of the Internal Revenue Code. |
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(9) | In the event employment is terminated due to disability, a pro rata portion (based on the portion of the performance period completed prior to the employment termination) of the performance shares determined to have been earned at the end of the three-year performance period will be paid out after the end of the performance period. For PSAs addressed in this table, these determinations cannot be made until after the end of fiscal 2021 and fiscal 2022, respectively. |
(2) In the case of termination involuntarily without cause, in connection with a change in control, or due to retirement, the named executive officers receive a pro-rata portion of their target bonus. Because the assumed termination date of January 29, 2021 is the last day of the fiscal year, this column reflects the target bonus amounts of the date of termination.
(3) In the case of a qualifying termination not in connection with a change in control, severance amounts represent a single lump sum payment equal to two times for Ms. Keene and 1.5 times for all other named executive officers the sum of (a) the named executive officer's fiscal 2021 base salary and (b) the average of the annual bonuses paid for fiscal 2020, 2019 and 2018. In the case of a qualifying termination in connection with a change in control, severance amounts represent a single lump sum payment equal to three times for Ms. Keene and two times for all other named executive officers of the sum of (a) the named executive officer's fiscal 2021 base salary and (b) his or her target annual bonus for fiscal 2021.
(4) In the case of a qualifying termination not in connection with a change in control, these amounts represent a lump sum cash payment of COBRA benefits for 24 months for the Chief Executive Officer and 18 months for all other named executive officers. In the case of a qualifying termination in connection with a change in control, these amounts represent a lump sum cash payment of COBRA benefits for 36 months for Ms. Keene and 24 months for all other named executive officers. Ms. Keene and Mr. Mahon do not participate in the Company’s group medical coverage.
(5) These amounts represent the maximum value to the named executive officer of outplacement counseling services to be provided for 12 months following a qualifying termination.
(6) These amounts represent the value of unvested options to purchase shares of our common stock issued under the 2013 Plan that were held by the named executive officer at the end of fiscal 2021 and whose vesting was accelerated in connection with a change in control, involuntary termination without cause, retirement, or termination due to death or disability. The value was calculated by multiplying the number of shares subject to the option whose vesting was accelerated by the difference between the closing market price per share of our common stock on the NYSE on January 29, 2021 and the applicable option exercise price. For more information regarding the number of shares underlying unvested options held by each of the named executive officers, see the table under the caption "Outstanding Equity Awards at Fiscal Year-End."
(7) These amounts represent the value of RSUs issued under the 2013 Plan that were held by the named executive officer at the end of fiscal 2021 and whose vesting was accelerated in connection with a change in control, involuntary termination without cause, retirement, or termination due to death or disability. The value was calculated by multiplying the number of RSUs whose vesting was accelerated by the closing market price per share of our common stock on the NYSE on January 29, 2021, and includes accrued dividend equivalents as of January 29, 2021. For more information regarding the number of unvested RSUs held by each of the named executive officers, see the table under the caption "Outstanding Equity Awards at Fiscal Year-End."
(8) These amounts represent the value of shares underlying outstanding PSAs issued under the 2013 Plan that were held by the named executive officer at the end of fiscal 2021 and whose vesting was accelerated in connection with a change in control, involuntary termination without cause, retirement, or termination due to death. The value was calculated by multiplying the number of performance shares whose vesting was accelerated by the closing market price per share of our common stock on the NYSE on January 29, 2021, and includes accrued dividend equivalents as of January 29, 2021. The number of performance shares whose vesting was accelerated was determined based on the sum of: (i) the actual number of shares earned by each named executive officer for the part of the award allocated to our annual operating cash flow performance goals for fiscal 2020 and 2021, and (ii) either (a) for the fiscal year 2020 grant, one-third of the shares allocated to the three-year cumulative adjusted EBITDA performance goal assuming results of approximately 82.4% of target, or (b) for the fiscal year 2021 grant, one-third of the shares allocated to the three-year cumulative adjusted EBITDA performance goal assuming results of approximately 86.8% of target, each for the portion of the performance period prior to the termination of employment. The number of actual shares earned by each named executive officer based on operating cash flow for fiscal 2020 was 112.8% of target for the fiscal 2020 award, and for fiscal 2021 was 150% and 200% of target for the respective awards. Note that PSAs from fiscal 2019 are not included in this table since they are deemed to be earned as of January 29, 2021.
(9) Under the Severance Policy, executives either receive (a) payment in full, or (b) have their payments cutback to avoid excise taxes payable pursuant to Sections 280G and 4999 of the Internal Revenue Code, depending on which option results in receipt of the greatest amount of severance benefits by the executive on an after-tax basis.
(10) In the event employment is terminated involuntarily without cause or due to retirement under the Severance Policy, the performance shares determined to have been earned at the end of the three-year performance period will be paid out after the end of the performance period. For PSAs addressed in this table, these determinations cannot be made until after the end of the fiscal 2022 and fiscal 2023, respectively.
(11) In the event employment is terminated due to disability, a pro rata portion (based on the portion of the performance period completed prior to the employment termination) of the performance shares determined to have been earned at the end of the three-year performance period will be paid out after the end of the performance period. For PSAs addressed in this table, these determinations cannot be made until after the end of fiscal 2022 and fiscal 2023, respectively.
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55Science Applications International Corporation |
2021 Proxy Statement | saic.com48 |
CEO Pay Ratio
We are providing the following information about the relationship of the annual median total compensation of our employees and the annual total compensation of Nazzic S. Keene, our Chief Executive Officer (“CEO”) at the end of fiscal 2020. On July 31, 2019, Ms. Keene, the company’s then-serving Chief Operating Officer, succeeded Mr. Moraco as CEO of the company. The elements included in Ms. Keene’s total compensation for purposes of the CEO pay ratio described below include an annualized base salary as CEO and, therefore, the total compensation used in this ratio will not match that of the "Summary Compensation Table" of this Proxy Statement.
2021.
Due to the acquisition of EngilityUnisys Federal on January 14, 2019,March 13, 2020, there has been a change in our employee population that we reasonably believe would result in a significant change inrequired the reexamination of our pay ratio disclosure. Therefore, we have re-identified the median employee for fiscal 20202021 as follows:
•As of December 31, 20192020 (our “Determination Date”), we collected data for all employees globally and used base pay as our consistently applied compensation measure. We identified employees within a narrow range of the estimated median and then usedemployed statistical sampling to select the median employee from within that range.
We then determined our median employee’s total compensation, including any perquisites and other benefits, in the same manner that we determine the total compensation of our named executive officers for purposes of the "SummarySummary Compensation Table"Table disclosed above. The median employee's total compensation in fiscal 20202021 was comprised of base salary and additional overtime compensation.
401(k) plan contributions.
Based on the above calculations, for fiscal 2020,2021, our last completed fiscal year:
•the median of the annual total compensation of all employees of our company (other than our CEO) was $93,568;$99,823; and
•the “annualized” total compensation of our CEO was $6,162,984.$6,936,702.
Therefore, we reasonably estimate that the ratio of our CEO’s annual total compensation to the annual total compensation of our median employee for fiscal 2020 was 66:69:1. Our pay ratio estimate has been calculated in a manner consistent with item 401(u) of Regulation S-K.
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| | Science Applications International Corporation |
2020 Proxy Statement49 | 56saic.com |
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PROPOSAL 43 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PROPOSAL 43 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee believes that the appointment of Ernst & Young LLP ("EY") is in the best interests of the company and its stockholders, and proposes and recommends that the stockholders ratify the Audit Committee’s appointment of EY as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending January 29, 2021.28, 2022. Representatives of EY will be present at the virtual annual meeting to respond to appropriate questions and will have the opportunity to make a statement if they desire to do so.
Stockholders are not required to ratify the appointment of EY as our independent registered public accounting firm. However, we are submitting the appointment for ratification as a matter of good corporate practice. If stockholders fail to ratify the appointment, the Audit Committee will consider whether or not to retain EY. Even if the appointment is ratified, the Audit Committee may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that a change in accounting firms would be in our stockholders’ best interests.
Vote Required
The affirmative vote of the holders of a majority of the voting power of common stock present or represented and entitled to vote at the virtual annual meeting is required to approve the proposal. Abstentions have the effect of a vote against the proposal, and broker “non-votes” have no effect on the outcome of the proposal. Shares of common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon. In the absence of specific instructions, properly executed, timely received and unrevoked proxies will be voted “FOR” the proposal.
Recommendation of the Board
The Board unanimously recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 29, 2021.28, 2022.
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57Science Applications International Corporation |
2021 Proxy Statement | saic.com50 |
AUDIT MATTERS
Audit Committee Report
The Audit Committee of the Board is responsible for assisting the Board in fulfilling its oversight responsibilities over the company’s accounting, auditing and financial reporting processes, internal controls, and for monitoring compliance with certain regulatory and legal requirements. The responsibilities of the Audit Committee are described in a written charter that has been reviewed and approved by the Board. The current Audit Committee charter is available on the company’s Investorinvestor relations website at investors.saic.com by clicking on the link entitled “Corporate Governance.” A summary of the provisions of the Audit Committee charter, including the responsibilities of the Audit Committee, is set forth in this Proxy Statement under "Corporate Governance – Audit Committee," beginning on page 19.
Management is responsible for preparing the company’s financial statements and for the financial reporting process, including evaluating the effectiveness of the company’s disclosure controls and procedures and internal control over financial reporting.
Ernst & Young LLP ("EY"),EY, the company’s independent registered public accounting firm for the company's fiscal year ended January 31, 2020,2021, is responsible for performing an independent audit of the company’s annual consolidated and combined financial statements and expressing an opinion on the conformity of the financial statements with accounting principles generally accepted in the United States of America, and on the effectiveness of the company’s internal control over financial reporting.
Each current Audit Committee member (Robert A. Bedingfield, Yvette M. Kanouff, David M. Kerko, Timothy J. Mayopoulos and Steven R. Shane) meets the independence and financial literacy requirements of the SEC and the NYSE as well as qualifies as an audit committee financial expert under SEC rules. For a further description of each Audit Committee member’s background and expertise, please refer to the director qualification section of this Proxy Statement beginning on page 10.
In the course of fulfilling its responsibilities, the Audit Committee has:
• evaluated the qualifications, performance and compensation of the company’s independent auditor (EY);
• separately met with the internal auditor and EY to discuss any matters that the internal auditor, EY or the Audit Committee believed should be discussed privately without members of management present;
• reviewed and discussed with EY the items required to be disclosed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC;
• received written disclosures and the letter from EY regarding its independence required by applicable requirements of the PCAOB, and discussed with EY its independence;
• reviewed and discussed with management and EY the company’s internal control over financial reporting; and
• reviewed and discussed with management and EY the audited consolidated financial statements for the fiscal year ended January 31, 2020.2021.
Based on the reviews and discussions summarized in this report and subject to the limitations on our role and responsibilities referred to above and contained in the Audit Committee charter, the Audit Committee recommended to the Board that the company’s audited consolidated financial statements referred to above be included in the company’s Annual Report on Form 10-K for the fiscal year ended January 31, 20202021 for filing with the SEC.
Robert A. Bedingfield (Chair)
Yvette M. Kanouff
David M. Kerko
Timothy J. Mayopoulos
Steven R. Shane
Independent Registered Public Accounting Firm
The Audit Committee of the Board has appointed Ernst & Young LLP as the independent registered public accounting firm to audit our financial statements for the company's fiscal year ending January 29, 2021.28, 2022. Stockholders are being asked to ratify the appointment of Ernst & Young LLP at the annual meeting, as described above.
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| | Science Applications International Corporation |
2020 Proxy Statement51 | 58saic.com |
Audit and Non-Audit Fees
Aggregate fees billed to the company for fiscal 20202021 and fiscal 20192020 by our independent registered public accounting firm, Ernst & Young LLP ("EY"),EY, were as follows:
| | | | | | | | |
| January 29, 2021 | January 31, 2020 |
Audit Fees(1) | $ | 5,200,000 | $ | 5,000,000 |
Audit-Related Fees(2) | $ | — | $ | 931,139 |
Tax Fees(3) | $ | 23,068 | $ | 115,739 |
All Other Fees(4) | $ | — | $ | 581,493 |
Total Fees | $ | 5,223,068 | $ | 6,628,371 |
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| January 31, 2020 |
| February 1, 2019 |
|
Audit Fees(1) | $ | 5,000,000 |
| $ | 3,070,000 |
|
Audit-Related Fees(2) | $ | 931,139 |
| $ | 910,000 |
|
Tax Fees(3) | $ | 115,739 |
| $ | 135,750 |
|
All Other Fees(4) | $ | 581,493 |
| $ | 363,553 |
|
Total Fees | $ | 6,628,371 |
| $ | 4,479,303 |
|
(1) Audit Fees consist of professional services rendered for the audit of the annual consolidated financial statements, including the audit of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and the review of quarterly consolidated financial statements. Audit fees also include services that are normally provided by the accountant in connection with the audit, such as consents and certain other company filings and submissions with the SEC. | |
(1) | Audit Fees consist of professional services rendered for the audit of the annual consolidated financial statements, including the audit of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and the review of quarterly consolidated financial statements. Audit fees also include services that are normally provided by the accountant in connection with the audit, such as consents and certain other company SEC filings and submissions. |
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(2) | Audit-Related Fees reflect fees for services that are reasonably related to the performance of the audit or review of the company’s financial statements. For fiscal 2020, this included fees related to the company's implementation of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 842, Leases, and due diligence services. For fiscal 2019, this included fees related to the company’s adoption of ASC Topic 606, Revenue from Contracts with Customers, and fees for audit services related to the acquisition of Engility. |
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(3) | Tax Fees include a variety of permissible tax services related to preparation and/or review of statutory tax filings within U.S., foreign, and state jurisdictions, general tax advisory services (including research and discussions related to tax compliance matters) and assistance with credits and incentives opportunities in various jurisdictions. |
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(4) | All Other Fees for fiscal 2020 related to advisory fees in connection with one of the company's customer contracts. For fiscal 2019, these fees related to advisory fees in connection with Service Organization Controls 2 readiness for one of the company’s customer contracts, delivery and training on various SharePoint templates, and workforce optimization advisory services. |
(2) Audit-Related Fees reflect fees for services that are reasonably related to the performance of the audit or review of the company’s financial statements. For fiscal 2020, this included fees related to the company's implementation of Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 842, Leases, and due diligence services.
(3) Tax Fees include a variety of permissible tax services related to preparation and/or review of statutory tax filings within U.S., foreign, and state jurisdictions, general tax advisory services (including research and discussions related to tax compliance matters) and assistance with credits and incentives opportunities in various jurisdictions.
(4) All Other Fees for fiscal 2020 related to advisory fees in connection with one of the company's customer contracts.
The Audit Committee has considered whether the above services provided by EY are compatible to maintaining the independence of EY. The Audit Committee has the responsibility to pre-approve all audit and non-audit services to be performed by the independent registered public accounting firm in advance. Further, the Chair of the Audit Committee has the authority to pre-approve audit and non-audit services as necessary between regular meetings of the Audit Committee, provided that any of those services that were pre-approved in that manner will be disclosed to the full Audit Committee at its next scheduled meeting. All of the Audit Fees, Audit-Related Fees, non-audit Tax Fees, and All Other Fees set forth above were pre-approved by one of these means.
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59Science Applications International Corporation |
2021 Proxy Statement | saic.com52 |
OTHER INFORMATION
Stock Ownership of Certain Beneficial Owners
The following table provides information regarding the beneficial ownership of each person known by us to beneficially own more than five percent of SAIC common stock as of April 7, 2020.6, 2021.
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Name and address of beneficial owner | Amount and nature of beneficial ownership | Percent of class |
Wellington Management Group LLP(1) | 5,954,533 | 10.3% |
c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | | |
The Vanguard Group(2) | 5,228,737 | 9.0% |
100 Vanguard Blvd. Malvern, PA 19355 | | |
BlackRock, Inc.(3) | 4,874,772 | 8.4% |
55 East 52nd Street New York, NY 10055 | | |
Boston Partners(4) | 4,100,985 | 7.1% |
One Beacon Street, 30th Floor Boston, MA 02108 | | |
(1) Information shown is based on information reported by the filer on a Schedule 13G/A filed with the SEC on February 10, 2021 in which Wellington Management Group LLP, an investment adviser filing on behalf of itself and as parent of certain holding companies and the Wellington Investment Advisers, reported that it has shared voting power over 5,160,117 shares and shared dispositive power over 5,954,533 shares.
(2) Information shown is based on information reported by the filer on a Schedule 13G/A filed with the SEC on February 10, 2021 in which The Vanguard Group, an investment adviser filing on behalf of itself and certain of its subsidiaries, reported that it has shared voting power over 38,767 shares, sole dispositive power over 5,148,099 shares and shared dispositive power over 80,638 shares.
(3) Information shown is based on information reported by the filer on a Schedule 13G/A filed with the SEC on February 1, 2021 in which BlackRock, Inc., a holding company filing on behalf of itself and certain of its subsidiaries, reported that it has sole voting power over 4,688,457 shares and sole dispositive power over 4,874,772 shares.
(4) Information shown is based on information reported by the filer on a Schedule 13G/A filed with the SEC on February 11, 2021 in which Boston Partners, an investment adviser filing on behalf of itself, reported that it has sole voting power over 2,984,161 shares, shared voting power over 6,477 shares and sole dispositive power over 4,100,985 shares.
|
| | | | |
Name and address of beneficial owner | Amount and nature of beneficial ownership |
| Percent of class |
|
BlackRock, Inc.(1) | 6,198,792 |
| 10.7 | % |
55 East 52nd Street New York, NY 10055 | | |
The Vanguard Group(2) | 5,446,356 |
| 9.4 | % |
100 Vanguard Blvd. Malvern, PA 19355 | | |
General Atlantic LLC(3) | 4,032,200 |
| 7.0 | % |
c/o General Atlantic Services Company, L.P. 55 East 52nd Street, 33rd Floor New York, NY 10055
| | |
Boston Partners(4) | 3,117,604 |
| 5.4% |
|
One Beacon Street, 30th Floor Boston, MA 02108 | | |
| | | | | | | | |
(1) | Information shown is based on information reported by the filer on a Schedule 13G/A filed with the SEC on February 4, 2020 in which BlackRock, Inc., a holding company filing on behalf of a number of its subsidiaries, reported that it has sole voting power over 6,085,601 shares and sole dispositive power over 6,198,792 shares.53 | saic.com |
| | | | | | | | |
(2) | Information shown is based on information reported by the filer on a Schedule 13G/A filed with the SEC on February 12, 2020 in which The Vanguard Group, an investment adviser filing on behalf of itself and two wholly-owned subsidiaries, reported that it has sole voting power over 118,938 shares, shared voting power over 10,978 shares, sole dispositive power over 5,322,663 shares and shared dispositive power over 123,693 shares.OTHER INFORMATION |
| |
(3) | Information shown is based on information reported by the filer on a Schedule13G filed with the SEC on January 24, 2019 in which General Atlantic LLC, a private equity firm filing on behalf of itself and seven affiliates, reported that it has shared voting power and shared dispositive power over 4,032,200 shares. |
| |
(4) | Information shown is based on information reported by the filer on a Schedule 13G filed with the SEC on February 11, 2020 in which Boston Partners, an investment adviser filing on behalf of itself, reported that it has sole voting power over 2,607,844 shares, shared voting power over 4,695 shares and sole dispositive power over 3,117,604 shares. |
Stock Ownership of Directors and Officers
The following table sets forth, as of April 7, 2020,6, 2021, the beneficial ownership of our common stock by our directors, the named executive officers, and all of our directors and executive officers as a group. None of our directors or executive officers beneficially own more than one percent of our common stock. As a group, our directors and executive officers beneficially own approximately [0.86]%.97% of our common stock. Unless otherwise indicated, each individual has sole investment power and sole voting power with respect to the shares beneficially owned by that individual, except for any investment or voting power that may be shared with a spouse. No shares have been pledged.
| | | | | | | | | | | | | | |
Beneficial Owner | Common stock(1) | Stock units(2) | Options and RSUs(3) | Total shares beneficially owned |
Non-Employee Directors | | | | |
Robert A. Bedingfield | 30,406 | | 2,839 | | 19,215 | | 52,460 | |
Carol A. Goode | 899 | | — | | 3,740 | | 4,639 | |
Garth N. Graham | — | | — | | — | | — | |
John J. Hamre | 14,321 | | — | | 10,185 | | 24,506 | |
Yvette M. Kanouff | 2,399 | | — | | 3,740 | | 6,139 | |
Timothy J. Mayopoulos | 5,664 | | — | | 19,215 | | 24,879 | |
Katharina G. McFarland | 1,932 | | — | | 6,047 | | 7,979 | |
Donna S. Morea | 15,874 | | — | | 28,229 | | 44,103 | |
Steven R. Shane | 23,429 | | — | | 19,215 | | 42,644 | |
Named Executive Officers | | | | |
Nazzic S. Keene | 73,556 | | — | | 158,677 | | 232,233 | |
Prabu Natarajan | 3,000 | | — | | — | | 3,000 | |
Charles A. Mathis (4) | 12,512 | | — | | 32,131 | | 44,643 | |
Robert S. Genter | 13,186 | | — | | 5,497 | | 18,683 | |
Steven G. Mahon | 19,321 | | — | | 34,808 | | 54,129 | |
Michael W. LaRouche | 4,015 | | — | | 3,608 | | 7,623 | |
All directors and executive officers as a group (15 persons) | 220,514 | | 2,839 | | 344,307 | | 567,660 | |
(1) Information in this column includes (a) the approximate number of shares allocated to all directors and officers as a group, 136,963 shares, and (b) shares held by certain trusts established by the individuals as follows: Mr. Bedingfield, 21,392 shares; Mr. Shane, 2,000 shares; and Ms. Keene, 60,159 shares. |
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| | Science Applications International Corporation |
2020 Proxy Statement | 60 |
(2) Represents vested stock units attributable to the individual or the group in the Key Executive Stock Deferral Plan. Shares held in these plans are voted by the trustee in the same proportion as all other stockholders collectively vote their shares of common stock.
(3) Shares subject to options exercisable or RSUs subject to vesting, both within 60 days following April 6, 2021.
(4) Based solely on information set forth in Mr. Mathis' Form 4 filed with the SEC on July 13, 2020.
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| | | | | | |
Beneficial Owner | Common stock(1) |
| Stock units(2) |
| Options and RSUs(3) | Total shares beneficially owned |
Current Non-Employee Directors | | | | |
Robert A. Bedingfield | 13,826 |
| 2,789 |
| 34,061 | 50,676 |
Carol A. Goode | — |
| — |
| 2,905 | 2,905 |
John J. Hamre | 13,033 |
| — |
| 9,739 | 22,772 |
Yvette M. Kanouff | — |
| — |
| 2,905 | 2,905 |
David M. Kerko | — |
| — |
| 6,245 | 6,245 |
Timothy J. Mayopoulos | 6,561 |
| — |
| 18,769 | 25,330 |
Katharina G. McFarland | — |
| — |
| 6,245 | 6,245 |
Donna S. Morea | 10,826 |
| — |
| 34,061 | 44,887 |
Steven R. Shane | 12,826 |
| — |
| 34,061 | 46,887 |
Current Named Executive Officers | | | | |
Nazzic S. Keene | 36,510 |
| — |
| 125,212 | 161,722 |
Charles A. Mathis | 4,810 |
| — |
| 32,131 | 36,941 |
Steven G. Mahon | 6,382 |
| — |
| 34,116 | 40,498 |
Robert S. Genter | 1,152 |
| — |
| 4,702 | 5,854 |
James J. Scanlon | 12,207 |
| 5,591 |
| 27,115 | 44,913 |
All directors and executive officers as a group (14 persons) | 118,133 |
| 8,380 |
| 372,267 | 498,780 |
| |
(1) | Information in this column includes (a) the approximate number of shares allocated to the account of the individual by the trustee of the SAIC Retirement Plan as follows: Mr. Scanlon, 4,604 shares; and all directors and officers as a group, 65,338 shares, (b) shares held by certain trusts established by the individuals as follows: Mr. Bedingfield, 12,631 shares; Mr. Shane, 2,000 shares; and Ms. Keene, 36,324 shares. |
| |
(2) | Represents vested stock units attributable to the individual or the group in the Key Executive Stock Deferral Plan. Shares held in these plans are voted by the trustee in the same proportion as all other stockholders collectively vote their shares of common stock. |
| |
(3) | Shares subject to options exercisable or RSUs subject to vesting, both within 60 days following April 7, 2020.
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Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the rules of the SEC require our directors and executive officers as well as persons who beneficially own more than ten percent of our common stock to file reports of their ownership and changes in ownership of common stock with the SEC. For our directors and executive officers, our personnel generally prepare and file these reports on the basis of information obtained from each director and officer and pursuant to a power of attorney. Due to an administrative oversight on the part of the company, an amended Form 3 for Mr. Scanlon was filed late during fiscal 2020 with respect to unintentionally omitted shares of common stock from Mr. Scanlon's original Form 3. Due to an administrative oversight on the part of the company, an amended Form 4 for each of Messrs. Bedingfield and Scanlon was filed during fiscal 2020 with respect to unintentionally omitted shares of common stock from each original Form 4. Based solely on the information provided to us, we believe that all other reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended, to be filed by our directors, executive officers and greater than ten percent stockholders complied with all filing requirements under Section 16(a) of the Exchange Act during fiscal 2020, were filed on time with the SEC.2021.
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Science Applications International Corporation |
2021 Proxy Statement | 54 |
Stockholder Proposals and Director Nominations for the 20212022 Annual Meeting
Stockholders who, in accordance with Rule 14a-8 of the Exchange Act, wish to present proposals for inclusion in the proxy materials to be distributed in connection with next year’s annual meeting must submit their proposals so they are received by our Corporate Secretary no later than the close of business (5:00 p.m. ET) on December 24, 2020.22, 2021. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included.
In order to be properly brought before the annual meeting of stockholders to be held in 20212022 (the "2021"2022 Annual Meeting"), a stockholder who desires to provide notice of nomination of one or more director candidates to be included in the company’s
proxy statement and ballot pursuant to Section 3.17 of our bylaws (a “proxy access nomination”) must be received by our Corporate Secretary no earlier than November 23, 202022, 2021 and no later than the close of business on December 23, 202022, 2021 (not later than the close of business on the 120th day nor earlier than the close of business on the 150th day prior to the first anniversary of the date the definitive proxy statement was first released to stockholders in connection with the preceding year’s annual meeting of stockholders). If the date of the 20212022 Annual Meeting is more than 30 days before or more than 70 days after that anniversary date, notice of the proxy access nomination by the stockholder to be timely must be received not earlier than the close of business on the 120th day and not later than the close of business on the later of the 90th day prior to the 20212022 Annual Meeting or the close of business on the 10th day following the day on which the notice of proxy access nomination is mailed or public announcement of the date of the 20212022 Annual Meeting is first made by the company, whichever first occurs.
In addition, in order for a stockholder to propose any matter for consideration at the 20212022 Annual Meeting other than by inclusion in the proxy statement, the stockholder must give timely notice to our Corporate Secretary of his or her intention to bring such business before the meeting. To be timely, notice must be delivered to the Corporate Secretary not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting. Therefore, in connection with the 20212022 Annual Meeting, notice must be delivered to the Corporate Secretary between February 3, 20212, 2022 and March 5, 2021.4, 2022. In the event, however, that the date of the annual meeting2022 Annual Meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder must be delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by us, whichever occurs later.
Any stockholder’s notice must include additional information about the stockholder and the underlying beneficial owner, if any, required under our bylaws, as amended from time to time, and SEC rules and regulations, including the information that would be required to be disclosed in a proxy statement soliciting proxies for the election of any proposed nomination of one or more director candidates. A stockholder’s notice must be updated, if necessary, so that the information submitted is true and correct as of the record date for determining stockholders entitled to receive notice of the meeting.
Annual Report on Form 10-K
We will provide without charge to any stockholder, upon written or oral request, a copy of our Annual Report on Form 10-K for fiscal 20202021 without exhibits. Requests should be directed to SAIC, 12010 Sunset Hills Road, Reston, Virginia 20190, Attention: Corporate Secretary, or by calling (703) 676-2064.
By Order of the Board of Directors
Steven G. Mahon
Corporate Secretary
April 22, 202021, 2021
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| | Science Applications International Corporation |
2020 Proxy Statement55 | 62saic.com |
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APPENDIX TO PROXY STATEMENT |
APPENDIX TO PROXY STATEMENT
This appendix describes the non-GAAP financial measures included in the Proxy Statement. While we believe that these non-GAAP financial measures may be useful in evaluating our financial information, they should be considered as supplemental in nature and not as a substitute for financial information prepared in accordance with GAAP. Other companies may define similar measures differently.
| | | | | | | | | | | |
| Year Ended |
| January 29, 2021 | January 31, 2020 | February 1,2019 |
| (in millions) |
Net income | $211 | | $229 | | $137 | |
Interest expense and loss on sale of receivables | 124 | | 90 | | 53 | |
Interest income | (1) | | (4) | | (3) | |
Provision for income taxes | 60 | | 57 | | 33 | |
Depreciation and amortization | 179 | | 131 | | 47 | |
EBITDA(1) | $573 | | $503 | | $267 | |
EBITDA as a percentage of revenues | 8.1 | % | 7.9 | % | 5.7 | % |
Acquisition and integration costs | 54 | | 48 | | 86 | |
Restructuring costs | 4 | | — | | — | |
Depreciation included in acquisition and integration costs | (1) | | (5) | | — | |
Recovery of acquisition and integration costs and restructuring costs(2) | (3) | | (8) | | — | |
Adjusted EBITDA(1) | $627 | | $538 | | $353 | |
Adjusted EBITDA as a percentage of revenues | 8.9 | % | 8.4 | % | 7.6 | % |
|
| | | | | | |
| Year Ended |
| January 31, 2020 |
| February 1, 2019 |
| February 2, 2018 |
|
| (in millions) |
Net income | $229 | $137 | $179 |
Interest expense | 90 |
| 53 |
| 44 |
|
Interest income | (4 | ) | (3 | ) | (1 | ) |
Provision for income taxes | 57 |
| 33 |
| 35 |
|
Depreciation and amortization | 131 |
| 47 |
| 44 |
|
EBITDA(1) | $503 | $267 | $301 |
EBITDA as a percentage of revenues | 7.9 | % | 5.7 | % | 6.8 | % |
Acquisition and integration costs | 48 |
| 86 |
| — |
|
Restructuring costs | — |
| — |
| 13 |
|
Depreciation included in restructuring costs and acquisition and integration costs | (5 | ) | — |
| (1 | ) |
Recovery of acquisition and integration costs(2) | (8 | ) | — |
| — |
|
Adjusted EBITDA(1) | $538 | $353 | $313 |
Adjusted EBITDA as a percentage of revenues | 8.4 | % | 7.6 | % | 7.0 | % |
| |
(1) | EBITDA is a performance measure that is calculated by taking net income and excluding interest expense, interest income, provision for income taxes, and depreciation and amortization. Adjusted EBITDA is a performance measures that excludes restructuring and acquisition and integration costs that we do not consider to be indicative of our ongoing operating performance. Integration costs excluded are costs to integrate acquired companies and include the costs of strategic consulting services, facility consolidation and employee severance. The acquisition and integration costs relate to the company’s significant acquisitions of Engility in January 2019 and Unisys Federal in March 2020.(1) EBITDA is a performance measure that is calculated by taking net income and excluding interest expense and loss on sale of receivables, interest income, provision for income taxes, and depreciation and amortization. Adjusted EBITDA is a performance measures that excludes restructuring and acquisition and integration costs that we do not consider to be indicative of our ongoing operating performance. Integration costs excluded are costs to integrate acquired companies and include the costs of strategic consulting services, facility consolidation and employee severance. The acquisition and integration costs relate to the company’s significant acquisitions of Unisys Federal in March 2020 and Engility in January 2019. We believe that these performance measures provide management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the Company. |
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(2) | Adjustment to reflect the portion of acquisition and integration costs recovered through the company's indirect rates in accordance with Cost Accounting Standards. |
(2) Adjustment to reflect the portion of acquisition and integration costs and restructuring costs recovered through the company's indirect rates in accordance with Cost Accounting Standards.
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63Science Applications International Corporation |
2021 Proxy Statement | saic.com56 |
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| | | | | | | |
APPENDIX TO PROXY STATEMENT |
In addition to the above non-GAAP financial measures, the table below describes adjusted performance measures related to the Performance Share Plan and Short-Term Incentive ("STI") Awards included in the Proxy Statement.
| | | Year Ended | | Year Ended |
| January 31, 2020 |
| February 1, 2019 |
| February 2, 2018 |
| | January 29, 2021 | January 31, 2020 | February 1,2019 |
| (in millions) | | (in millions) |
Performance Share Plan Adjusted Performance Measures | | Performance Share Plan Adjusted Performance Measures | |
Operating income | $370 | $220 | $256 | |
Operating income as a percentage of revenues | 5.8 | % | 4.7 | % | 5.7 | % | |
Restructuring costs | — |
| — |
| 13 |
| |
Net income | | Net income | $211 | | $229 | | $137 | |
Interest expense and loss on sale of receivables | | Interest expense and loss on sale of receivables | 124 | | 90 | | 53 | |
Interest income | | Interest income | (1) | | (4) | | (3) | |
Provision for income taxes | | Provision for income taxes | 60 | | 57 | | 33 | |
Depreciation and amortization | | Depreciation and amortization | 179 | | 131 | | 47 | |
EBITDA(1) | | EBITDA(1) | $573 | | $503 | | $267 | |
EBITDA as a percentage of revenues | | EBITDA as a percentage of revenues | 8.1 | % | 7.9 | % | 5.7 | % |
Acquisition and integration costs | 48 |
| 86 |
| — |
| Acquisition and integration costs | 52 | | 35 | | 86 | |
Recovery of acquisition and integration costs | (8 | ) | — |
| — |
| |
Adjusted operating income(1) | $410 | $306 | $269 | |
Adjusted operating income as a percentage of revenues | 6.4 | % | 6.6 | % | 6.0 | % | |
Amortization of acquired intangibles | 94 |
| 24 |
| 20 |
| |
Restructuring costs | — |
| — |
| (13 | ) | |
Acquisition and integration costs | (5 | ) | — |
| — |
| |
Performance share plan adjusted operating income | $499 | $330 | $276 | |
Performance share plan adjusted operating income as a percentage of revenues | 7.8 | % | 7.1 | % | 6.2 | % | |
Restructuring impacts | | Restructuring impacts | 2 | | — | | — | |
Performance share plan adjusted EBITDA | | Performance share plan adjusted EBITDA | $627 | | $538 | | $353 | |
Performance share plan adjusted EBITDA as a percentage of revenues | | Performance share plan adjusted EBITDA as a percentage of revenues | 8.9 | % | 8.4 | % | 7.6 | % |
| | |
Cash flows provided by operating activities | $458 | $184 | $217 | Cash flows provided by operating activities | $755 | | $458 | | $184 | |
Excess tax benefits on stock based compensation | (4 | ) | (9 | ) | (22 | ) | Excess tax benefits on stock based compensation | 3 | | (4) | | (9) | |
Cash paid for acquisition and integration costs | 27 |
| 59 |
| — |
| Cash paid for acquisition and integration costs | 32 | | 18 | | 59 | |
Tax reform impact | (31 | ) | (28 | ) | (3 | ) | |
Restructuring impacts | | Restructuring impacts | (2) | | — | | — | |
Platform integration program working capital changes | 33 |
| 23 |
| (35 | ) | Platform integration program working capital changes | 17 | | 17 | | 7 | |
Performance share plan adjusted operating cash flow | $483 | $229 | $157 | Performance share plan adjusted operating cash flow | $805 | | $489 | | $241 | |
| | |
Short-Term Incentive Adjusted Performance Measures | | Short-Term Incentive Adjusted Performance Measures | |
Revenue | $6,379 | $4,659 | $4,454 | Revenue | $7,056 | | $6,379 | | $4,659 | |
Engility revenue | — |
| (98 | ) | — |
| Engility revenue | — | | — | | (98) | |
Government shutdown impact | — |
| 24 |
| — |
| Government shutdown impact | — | | — | | 24 | |
Revenues from former Parent | — |
| — |
| (6 | ) | |
COVID-19 impact | | COVID-19 impact | 262 | | — | | — | |
STI adjusted revenue | $6,379 | $4,585 | $4,448 | STI adjusted revenue | $7,318 | | $6,379 | | $4,585 | |
| | |
Net income(3) | $229 | $156 | (2) |
| |
Interest expense | 90 |
| 53 |
| (2) |
| |
Net income(2) | | Net income(2) | $211 | | $229 | | $156 | |
Interest expense and loss on sale of receivables | | Interest expense and loss on sale of receivables | 124 | | 90 | | 53 | |
Interest income | (4 | ) | (3 | ) | (2) |
| Interest income | (1) | | (4) | | (3) | |
Provision for income taxes(3) | 57 |
| 41 |
| (2) |
| |
Depreciation and amortization(3) | 131 |
| 43 |
| (2) |
| |
Provision for income taxes(2) | | Provision for income taxes(2) | 60 | | 57 | | 41 | |
Depreciation and amortization(2) | | Depreciation and amortization(2) | 179 | | 131 | | 43 | |
EBITDA(1) | $503 | $290 | (2) |
| EBITDA(1) | $573 | | $503 | | $290 | |
EBITDA as a percentage of revenues | 7.9 | % | 6.4 | % | (2) |
| EBITDA as a percentage of revenues | 8.1 | % | 7.9 | % | 6.2 | % |
Acquisition and integration costs | 35 |
| 54 |
| (2) |
| Acquisition and integration costs | 52 | | 35 | | 54 | |
Restructuring impacts | | Restructuring impacts | 2 | | — | | — | |
COVID-19 impact | | COVID-19 impact | 16 | | — | | — | |
Impact of government shutdown | — |
| 3 |
| (2) |
| Impact of government shutdown | — | | — | | 3 | |
STI adjusted EBITDA | $538 | $347 | (2) |
| STI adjusted EBITDA | $643 | | $538 | | $347 | |
| | |
Cash flows provided by operating activities(4)(3) | $458 | $215 | $217 | $755 | | $458 | | $215 | |
Cash paid for acquisition and integration costs | — |
| 35 |
| — |
| Cash paid for acquisition and integration costs | — | | — | | 35 | |
Impact from government shutdown | — |
| 21 |
| — |
| Impact from government shutdown | — | | — | | 21 | |
Excess tax benefits on stock based compensation | (4 | ) | (9 | ) | (22 | ) | Excess tax benefits on stock based compensation | 3 | | (4) | | (9) | |
Contract collections | — |
| — |
| 19 |
| |
Cash paid for restructuring costs | — |
| — |
| 5 |
| |
Impact from sale of receivables under Master Accounts Receivable Purchase Agreement | | Impact from sale of receivables under Master Accounts Receivable Purchase Agreement | (185) | | — | | — | |
COVID-19 impact | | COVID-19 impact | (73) | | — | | — | |
Restructuring impacts | | Restructuring impacts | (2) | | — | | — | |
STI adjusted operating cash flow | $454 | $262 | $219 | STI adjusted operating cash flow | $498 | | $454 | | $262 | |
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| | Science Applications International Corporation |
2020 Proxy Statement57 | 64saic.com |
|
| | | | | | | |
APPENDIX TO PROXY STATEMENT |
(1) EBITDA is a non-GAAP performance measure that is calculated by taking net income and excluding interest expense and loss on sale of receivables, interest income, provision for income taxes, and depreciation and amortization. We believe that this performance measure provides management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the company.
| |
(1) | Adjusted operating income is a non-GAAP performance measure that excludes restructuring and acquisition and integration costs that we do not consider to be indicative of our ongoing operating performance. The acquisition and integration costs relate to the company’s significant acquisition of Engility in January 2019 and Unisys Federal in March 2020. EBITDA is a non-GAAP performance measure that is calculated by taking net income and excluding interest expense, interest income, provision for income taxes, and depreciation and amortization. We believe that these performance measures provide management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the company.
|
| |
(2) | Information not included as this financial measure was not applicable for determining STI award amounts for this fiscal year. |
| |
(3) | (2) The STI performance goals for fiscal 2019 were based on the company's standalone financial information and excluded $19 million of net loss, $8 million of provision for income taxes (benefit) and $4 million of depreciation and amortization related to Engility during the period from January 14, 2019 through February 1, 2019. No adjustments were made to the other fiscal years presented. |
| |
(4) | The STI performance goals for fiscal 2019 were based on SAIC standalone financial information and excluded $31 million of cash flows used in operating activities related to Engility during the period from January 14, 2019 through February 1, 2019. No adjustments were made to the other fiscal years presented. |
(3) The STI performance goals for fiscal 2019 were based on SAIC standalone financial information and excluded $31 million of cash flows used in operating activities related to Engility during the period from January 14, 2019 through February 1, 2019. No adjustments were made to the other fiscal years presented.
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65Science Applications International Corporation |
2021 Proxy Statement | saic.com58 |